Lace Midnight FAQs

What is Midnight, and how does it relate to Cardano?

Midnight is a new privacy-focused blockchain (currently in testnet) built as a separate layer 1 protocol. While it operates independently from Cardano, it leverages its stake pool operator (SPO) infrastructure to inherit the robust root of trust Cardano has established.

Is Midnight a layer 2 of Cardano?

No. Currently in testnet, Midnight is a standalone layer 1 blockchain that integrates with some of Cardano's SPOs to maintain a high level of security and decentralization.

 

Where can I find more information about the Midnight blockchain?

Visit the official website midnight.network, where you’ll find everything from technical details to community updates. You can also join the Midnight Discord server: https://discord.com/invite/midnightnetwork 

 

Can anyone see who sent me a transaction?

No, Midnight transactions are designed to be private. The sender is the only party with complete transaction information, while the receiver knows only the assets received. The transaction details are not visible to any third party.

 

How do I create a Midnight wallet in Lace?

Midnight is live on mainnet as of March 2026, and setting up your Midnight wallet in Lace is straightforward. This guide walks you through the whole process, step by step.

Step 1: Install Lace

First things first, let's get Lace in your browser.

• Google Chrome or Brave: Get Lace from the Chrome Web Store

Once it's installed, you'll land on the Lace onboarding page. You're in the right place.

Step 2: Set up your Midnight wallet

Now for the exciting part. Let's create your Midnight wallet.

1. Click Create new wallet
2. Select Midnight and click Next.

Step 3: Choose or reuse your recovery phrase

You'll be asked whether you'd like to reuse your existing Cardano wallet's recovery phrase or generate a new one.

• Reuse - your Midnight wallet will be created from your Cardano recovery phrase
• Skip - a brand new recovery phrase will be generated for your Midnight wallet

For this walkthrough, we'll click Skip.

1. Your recovery phrase will be displayed, write it down, then click Next. This is available only if you didn’t reuse your previous wallet recovery phrase.
2. Re-enter your recovery phrase to confirm it, then click Next.
3. Name your wallet, set a password, confirm it, and click Next.

Step 4: Select your network and proof server

Almost there! Now choose your settings:

• Network: Mainnet
• Proof server - please follow the install instructions here

Click Enter wallet and you're done.

That's it, your Midnight wallet is ready!

What is Cardano-held NIGHT?

NIGHT is a token that exists across two blockchain networks: Cardano and Midnight. Because each network works a little differently, NIGHT takes on a slightly different form depending on which chain it's active on.

When NIGHT is on Cardano, it's known as a Cardano Native Asset. When it's on Midnight, it's known as a native token on Midnight network. Same token, two states.

The official whitepaper uses C.U (Cardano-Unlocked) and M.U (Midnight-Unlocked) to describe the same thing. Both mean exactly the same, so don't worry if you see either version used.

For the moment you cannot send NIGHT from your Cardano wallet (or from your CEX account) to your Midnight wallet, because these are two different blockchains. Work is in progress to enable this feature.

Visit Midnight’s FAQ section for more details.

What dependencies do I need to operate with Midnight?

To interact with Midnight, you can choose whether to run a local service called proof server, which is packaged as a Docker container, or connect to a remote service without any dependency, which is the default option. This service is responsible for generating Zero-Knowledge Succinct Non-Interactive Argument of Knowledge (ZK-SNARKs) required for transactions. You can find more information here

How does the proof server work, and why is it needed?

The proof server is a service that generates zero-knowledge proofs, ensuring that all transaction data remains private. Only these cryptographic proofs are sent to the Midnight blockchain.

What is a designation, and why do I need to do it?

A designation is the action of associating your NIGHT tokens to a Midnight address so they start generating DUST. Without a designation, your NIGHT will not generate DUST, and you won’t be able to transact on Midnight unless someone else sponsors you. Designating ensures your DUST balance (as represented in the Dust Tank) is filling and ready whenever you need to use the network.

What’s the difference between designating and receiving a designation?

• Designating: Using your NIGHT to generate DUST into a chosen Midnight wallet - either your own or someone else’s.
• Receiving a designation: Another party has designated their NIGHT so that DUST is generated into your address. For example, a DApp might sponsor your transactions by designating DUST to your address.

What is the difference between NIGHT and DUST?

Midnight uses a dual-component tokenomics system:

• NIGHT is the native token of Midnight. It exists on Cardano and Midnight via a protocol bridge, with tokens locked on one chain when unlocked on the other. NIGHT enables network participation and generates DUST when designated to a Midnight address.
• DUST is a shielded network resource used to pay for transaction capacity (Tx fees) on Midnight. DUST is continuously generated from NIGHT balances, up to a capped amount, and decays if the NIGHT is removed or undesignated. Unlike NIGHT, DUST cannot be transferred or accumulated as a long-term store of value.

‘NIGHT = wind turbine, DUST = electricity stored in a battery.’

Can I designate NIGHT from both Cardano and Midnight?

Yes. NIGHT is a multichain token, existing on Cardano as a Cardano Native Asset and on Midnight as a native token. Through the protocol bridge, NIGHT tokens are always locked on one chain when unlocked on the other, ensuring the total supply remains consistent. You can designate NIGHT held on either chain to generate DUST on Midnight.

When can I designate the NIGHT I received from the Glacier Drop?

For the NIGHT tokens you redeem on Cardano, the designation utility will be enabled when Midnight Mainnet launches.

However, you don't have to wait to see how it works! You can practice using the designation mechanism right now on the Midnight Preview network using test tokens in the Lace Midnight Preview extension.

How does DUST generation and decay work?

When you designate NIGHT to a Midnight DUST address, your balance starts generating DUST over time, filling your Dust Tank. If you undesignate or move your NIGHT, the DUST associated with that address starts to decay gradually until it reaches zero. DUST is renewable, but it must stay designated to NIGHT to keep refilling.

Why is DUST shielded, and what does that mean for me?

DUST is a shielded network resource, meaning transactions do not reveal metadata such as wallet addresses, amounts, or timestamps. This protects your privacy and prevents external surveillance.

Do I lose my NIGHT when I use DUST?

No. NIGHT is never consumed by transactions. It remains intact in your wallet, continuously generating DUST when designated. Only DUST is consumed when you pay for network capacity, while your NIGHT balance is unaffected.

Why does my DUST Tank have a maximum capacity?

Each NIGHT balance generates DUST up to a defined limit known as the DUST Cap. The DUST Cap is proportional to the amount of NIGHT designated, ensuring that resource generation remains balanced across the network.

Can I use Midnight without holding NIGHT?

Yes. You can still interact with Midnight if:

• A DApp or service sponsors your transactions (covering the DUST for you).
• Another user designates their NIGHT to you so that DUST is generated into your wallet. Owning NIGHT just gives you direct, predictable access to DUST at all times.