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The new cryptocurrency Midnight, launched by Cardano’s Charles Hoskinson, has seen a significant price drop immediately following its debut.
The sharp decline can be explained by the fact that a large portion of the total supply was distributed to investors through an airdrop. In an airdrop, users receive free tokens, which are often sold immediately.
Midnight’s Price Performance #
Midnight’s price began declining immediately after its launch on Tuesday, December 8, once trading started on major cryptocurrency exchanges like Binance and Bybit.
Although the broader crypto market rose nearly 2.5% that day, Midnight trading opened with a 60% drop.
This occurred because users had received approximately 16 of the 24 billion tokens through an airdrop, with a quarter of these immediately freely tradable. The remaining tokens will be unlocked over the next nine months in three phases.
The free tokens flooded the exchanges, and selling pressure increased significantly. The price fell from about $0.11 to $0.02, a drop of over 80%.
However, the price appears to be recovering somewhat toward $0.05 at the time of writing.
Midnight’s price during the first hours of its existence. Source: CoinMarketCap.
What is Cardano’s Midnight? #
Cardano has designed a new consensus protocol (method for approving blocks) in collaboration with Input Output Global, the company behind Cardano formerly known as IOHK (Input Output Hong Kong).
This consensus mechanism is called Jolteon. It’s designed to make Cardano faster and more scalable.
This protocol is at the heart of Cardano’s so-called sidechain, Midnight. Midnight is a blockchain with an emphasis on privacy. Jolteon is a protocol with rigorous verification and has been built robustly, following Input Output Global’s motto: research first, then launch.
Jolteon has the potential to process 5,000 transactions per second (TPS) and can verify a block on the Midnight blockchain in less than a second.
Midnight and Privacy #
Midnight is intended to become a privacy layer that can work with other networks to provide users with additional privacy.
The project is launching at a time when privacy coins are regaining popularity but face increasing regulatory pressure.
The blockchain is still in its rollout phase; according to the roadmap, the full version should be operational within a year.