Midnight Privacy Token Surges as Cardano Ecosystem Faces Diverging Paths

Cardano CRYPTO000ADA

A striking divergence is unfolding within the Cardano ecosystem. While the main blockchain contends with declining user activity, its associated privacy-focused project, Midnight, has recorded an unprecedented surge in trading volume. Over a 24-hour period, more than $4 billion worth of NIGHT tokens changed hands—a figure exceeding ten times the trading volume of ADA. This development raises a pivotal question for the network: does Cardano stand to gain from this success, or is capital flowing past its primary chain?

The trading frenzy around the NIGHT token briefly propelled the Midnight protocol to the fourth position among the highest-volume crypto assets over the weekend, trailing only Tether, Bitcoin, and Ethereum. Charles Hoskinson, CEO of Input Output Global, highlighted the scale of this activity with a notable social media comment. He observed that, at its peak, NIGHT generated more volume than the combined trading of XRP and Solana.

These figures present a stark contrast to the current state of the Cardano mainnet, which is processing transactions with approximately 25,000 active daily addresses. This represents a decline of over 70% from its annual highs. The massive liquidity attracted by Midnight appears driven by growing demand for data-protected smart contracts, which the partner chain is designed to facilitate.

Mainnet DeFi Metrics Weaken

Midnight's explosive growth occurs against a backdrop of contraction on Cardano's primary blockchain. The Total Value Locked (TVL) across its decentralized finance (DeFi) sector has dwindled to a range of $171 million to $182 million. This marks a drop of more than 60% from its peak of $423 million in the third quarter of 2025.

User interest remains subdued despite ongoing technical advancements. These include the integration of the Pyth Network oracle system, which provides institutional DeFi products with real-time data feeds. The underlying infrastructure continues to develop, yet actual adoption and usage metrics lag behind.

Political Recognition Meets Skepticism

Recent news of ADA's inclusion in a proposed U.S. "Crypto Strategic Reserve" failed to generate market enthusiasm, instead causing confusion. Hoskinson offered sharp criticism of the move, suggesting ADA was added "because they felt guilty." His skepticism stems from not being invited to the Crypto Summit at the White House, leading him to characterize the reserve inclusion as a political gesture lacking substantive technological justification.

This reaction tempered any potential speculative price momentum. The market largely perceives the "reserve status" as a fragile political narrative rather than a fundamental driver of new demand.

A Commercial Pivot for the Future

Looking ahead, Cardano is undertaking a strategic repositioning. Its "2030 Strategic Framework" signals a shift away from a purely academic focus toward delivering measurable commercial results. The new emphasis is on concrete use cases and revenue generation—a move considered overdue for a project often criticized for slow implementation.

A redesigned governance structure aims to accelerate decision-making processes. Whether these changes will suffice to redirect the liquidity currently concentrated on Midnight back to the main chain remains an open question. For now, the two chains appear to be moving in distinctly different directions.