Following the recent airdrop of the Midnight (NIGHT) token, Charles Hoskinson, the founder of Cardano, is facing a common inquiry from ADA holders: if the new NIGHT token is linked to Cardano’s privacy-focused network, why should they not sell ADA in favor of NIGHT? During a discussion on the Discover Crypto podcast, Hoskinson countered this notion, asserting that Midnight is intended to enhance ADA rather than replace it.
Why Not Exchange Cardano for NIGHT?
Hoskinson clarified that Midnight and ADA serve complementary roles, each with distinct functions. He described Midnight as akin to “the ChatGPT of privacy,” emphasizing its role as a blockchain-to-blockchain infrastructure module. The primary function of Midnight is to enable privacy features for applications built on the Cardano platform.
This differentiation is crucial to his argument: Midnight is not designed to drain liquidity from ADA but rather to serve as an infrastructure tool that empowers Cardano-based applications to stand out in the competitive decentralized finance (DeFi) arena. Hoskinson believes that applications built on Cardano are more likely to be early adopters of privacy features because they require an edge to attract users, unlike larger, slower-moving platforms.
“Which platforms do you think will prioritize adopting privacy features first?” Hoskinson questioned. “Will it be established giants like Uniswap and PancakeSwap, which are often conservative due to their substantial user bases? No, it will be the applications on Cardano that need to attract users, and this is their strategy to leap ahead of the competition.”
Expanding on this theme, Hoskinson introduced a cross-chain liquidity concept, highlighting Bitcoin DeFi as a potential source of new capital. He characterized Bitcoin as relatively indifferent to which blockchain it flows into for yield, credit, or utility, asserting that Cardano’s UTXO model is a more natural fit compared to account-based chains. “When considering Bitcoin, it doesn’t matter if it routes to Ethereum, Solana, or Cardano for yield,” he stated. “It will gravitate towards the nearest ‘continent,’ which in this analogy is Cardano because of its UTXO system aligning with Bitcoin’s own.” He suggested that through Cardano’s DeFi, particularly with Midnight integrated, Bitcoin could access privacy-preserving yield and credit opportunities.
Hoskinson also noted that this concept of privacy-preserving yield is not limited to Bitcoin alone. “The same applies to XRP and other cryptocurrencies,” he remarked, explaining that Midnight’s privacy tools are meant to integrate on-chain and off-chain infrastructures without detracting from the total value locked (TVL) or diminishing the appeal of other systems.
The ADA vs. NIGHT Decision: Security and Distribution
In practical terms, Hoskinson connected the decision to hold ADA versus switching to NIGHT with considerations of distribution and security. He pointed out that Cardano is the creator of Midnight, demonstrating its capability to execute significant projects while providing ADA holders with preferential access. “As an ADA holder, you gain initial access to these developments and receive a larger portion of the airdrop,” he explained. “Moreover, Cardano secures Midnight, meaning ADA holders will also receive NIGHT tokens.”
What’s Next for ADA?
Hoskinson was also asked about his expectations for the price of Cardano. While he refrained from specifying price targets, he discussed a theory he calls “value leakage” in relation to Bitcoin’s institutional demand. He believes Bitcoin is the only asset he can confidently predict, arguing that institutional investors are often “stuck” in Bitcoin due to ETFs and buy-and-hold strategies. This situation alters the traditional cycle mechanics where retail investors shift profits from Bitcoin into altcoins. Instead of selling BTC directly, he proposed that the primary method for capital to flow from Bitcoin to other ecosystems would be through yield generated via Bitcoin DeFi. If Cardano can provide yield and credit within a risk profile acceptable to institutional investors, he suggests that demand can “leak” from Bitcoin without needing to sell it.
This forms the basis for his belief that blockchains engaging with Bitcoin DeFi could experience price movements more in sync with Bitcoin, while others may remain disconnected, even if Bitcoin continues to rise. The overarching message was not to discourage trading but to illustrate a structural rationale for maintaining exposure to ADA. In Hoskinson’s view, Midnight is designed not to replace ADA but to broaden the range of functionalities that Cardano applications can offer, while ensuring ADA holders remain economically engaged through security ties and token distribution. At the time of reporting, ADA was valued at $0.36.
