Sidechain reaction
The term “sidechain” may not be familiar to everyone but it’s one deserving of attention.
A sidechain connects to a parent blockchain but largely runs independently from it.
Its main purpose is to assist in the scaling of the parent or mainnet.
Sidechains offer an alternative “route” to take some pressure off the mainnet when it becomes too congested.
The mechanism that allows digital assets to be transferred between the parent and sidechain is called a two-way peg.
Assets locked on the one can be unlocked on the other, and vice versa.
Aside from easing congestion on the mainnet, sidechains have huge appeal for developers.
They allow them to create consensus protocols that may not be permitted on the parent chain. They can also do so without fearing they will interfere with the operations of the mainnet.
Privacy locked down
Recent buzz around sidechains has arisen from what the Midnight sidechain could do for third-generation blockchain platform Cardano.
Despite expectations, Cardano has not managed to make inroads in the stablecoin space nor the real-world asset tokenization market.
This has meant it has had to look elsewhere in a bid to boost the Cardano to USD price.
The Midnight sidechain is focused on privacy and data protection.
It utilises what are known as zero-knowledge proofs, or ZKPs.
This is a protocol where one party can convince another that a statement is true.
There is no requirement for the first party to provide any additional information other than what has been stated.
By not disclosing any potentially-sensitive information the opportunities for data breaches are greatly diminished.
The appeal lies in the combination of Cardano’s reliability and Midnight’s privacy features.
This is exactly what established financial institutions are looking for as crypto gains a greater foothold in the traditional banking sector.
New era for Cardano
Cardano co-founder Charles Hoskinson is confident that the Midnight sidechain will result in more users migrating to the platform.
He further believes it will give a timely boost to Cardano’s decentralised finance (DeFi) applications.
Hoskinson has described Midnight as representing a “new era” for the platform.
There are more than a hundred partners behind the sidechain, among them a Fortune 500 company. That is the level of trust in the technology’s ability to change the crypto landscape.
Midnight also has its own token, NIGHT, giving it further credibility in the crypto market.
Cardano users were the first to get a taste of NIGHT thanks to a massive airdrop in late 2025.
Sharing the Midnight love
The key word in all of this is “interoperability”, or the ability of different systems, applications or organisations to work together by sharing, exchanging and using data seamlessly.
Notably, Midnight’s privacy layer is not limited to the Cardano platform.
Solana is likely to be among the first competitors to embrace privacy features for its real-world assets.
This is expected to encourage others to follow suit.
The Midnight rollout is all part of Cardano’s switch to “cleanup mode” after finding itself lagging in several areas over the past few years.
