Programmable Privacy for Real-World Apps with Midnight Network

GM GM. Welcome to what's going to be another fantastic episode of DevNTell. So if you didn't know, DevNTell is a 30-minute podcast allowing founders, hackers, and anyone in between the opportunity to showcase what they built. So today I'm ecstatic to welcome a good friend of mine and former colleague, Jonathan Albert, who is now a Solutions Engineer at Midnight Network. So if you didn't know, Midnight is an innovative new blockchain empowering groundbreaking apps that safeguard sensitive commercial and personal data. So if you stick around for today's episode, you'll get to meet Jonathan, get an introduction to Midnight Network, and learn how you can start building with it today. All right, let me get into it.

GM GM. Welcome to the show, Jay. Ecstatic to have you on today, man.

Hello, hello. Good morning. Well, for me, I guess it's evening right now. I'm in Da Nang, Vietnam, but it's great to talk to you. I'm excited to be on the show today.

Yeah, likewise, man, likewise. Yeah, both of us had to kind of move around our schedules a bit to get this one going, but I'm glad we worked out the timezone hell, so to speak, to do it. But yeah, man, really excited to have our audience learn about Midnight Network, a bit about you as well. I know you're really deeply entrenched in the Web3 scene, but yeah, I guess I'll throw it to you. Would you like to give an introduction of yourself?

Sure. So online I go by Jay. My full name is Jonathan, but I go by Jay typically. I am a Solutions Engineer here at the Midnight Foundation. So I am working with our institutional partners and our ecosystem partners to get their ideas across the line, whether they have bugs that they're running into, if they want to understand complex topics within our network, I'm usually there to help them get across the line. Before this, I was on the DevRel team, so helping out with docs, some AI tooling, hackathons, and really helping people understand what the network is about, how do you develop dApps on the network, and how do you go to mainnet deployment. So that's what I've been doing over the past year. I just recently completed my anniversary and transitioned to the Solutions Engineering team. So I'm excited to be part of the team and continuing to build with our ecosystem partners.

Amazing, man. Yeah, and I know both you and I worked at Lilypad before, doing decentralized AI and what not. Just curious, how did you get into the tech scene? How did you find yourself working in Web3?

Yeah, so I feel like I could talk about this forever, but for me personally, I think my dad's side of the family was always interested in tech. They were always buying the newest video game consoles, the newest computers, the newest fashion things. They were always trying to be ahead of the trend. So in my house early on, I had a computer, and no one knew what to do with it. It was just like the cool new thing everyone should have a computer in their house. And I was the only one who would tinker with it. At that time, I remember being in middle school, and I would have my own MySpace page. And for me, I would mess with the HTML. That's how I started getting involved. And I had my own music profile, and I had thousands of listeners at that time, and I was like 13 years old. So I realized really early on that technology is a powerful tool where I can reach thousands of people. I can build anything I could imagine, whether it's music, applications. So I've been fascinated ever since middle school. I continued studying computer science, computer information systems, and that's what I did actually in college. At that time, I didn't feel qualified to write code; I felt I had a lot to learn. So I went to business school for it, and I started off my first career at Oppenheimer Funds, which is a mutual fund in New York City. There I was exploring different emerging tech, and I came into contact with cryptocurrencies. There I started to learn about Bitcoin. I was trading on a few different platforms for Bitcoin, and I was talking to different people about it, but no one seemed interested; they didn't really see the picture or anything. So I just kept studying on my own. In 2019, we were acquired by Invesco, another mutual fund. So for me, that was an opportunity to go deeper into technology, learn about what's out there, get more involved, and I started to really accept that I can learn code. I can teach myself how to code, build things online, and I went deeper and deeper until I started deploying video games, VR applications, AR applications. Then around 2020, I realized there was a lot more here with Web3. At first, it was just cryptocurrencies, trading, trying to understand finance, but then DeFi came around. Then I was like, 'Oh wait, I can lend my assets to other people and make some money on this and gain absurd interest rates.' At that point, I think there were like 10,000% APRs, some absurd amount of money going around. So I got involved in DeFi summer. I was in NFT summer as well. I collected a bunch of different assets from collections like World of Women, Lazy Lions, World of Women, Bored Ape Yacht Club servers when they started launching some of their early video games and testing and prototyping. And I realized early on that we got the finance, we have the cultural components, we have NFTs, we have these DeFi things. At that point, I realized I need to go all in on this. It's finally evolving, it's finally becoming useful in a lot of different realms. And that's when I went all in. So I started off with Smith and Crown for consulting for tokenomics and NFT economies, understanding how do you incentivize user behaviors, what are sinks, what are faucets. From there, I went on to use some of my video game skills to work on the Godwoken Network, teaching people how to develop Unity games that use cryptocurrencies, NFTs, and what are the implications when these assets not only exist within a video game, but now you can take them outside, and you can have these experiences with users where because you have a video game asset, maybe you can get a piece of merch or discounted tickets. For me, it just opened up the door for creativity, imagination. After Godwoken, I worked with you at Lilypad for decentralized computing, and I've worked on a ton of different Web3 spaces, from computing, AI, to gaming, and now privacy tech. I focus on privacy tech now because I realize it's an important time in history. Everyone is aware that a lot of their data is being scraped online, especially with AI, a lot of people's work is being taken, and more and more people are becoming aware of the importance of privacy. For me, it just reminds me now of the original ethos of why I got involved in crypto. It was because when I was in Oppenheimer and started researching this, I realized crypto is about freedom. It's about the freedom to move your money wherever you want without it getting seized and without people telling you what to do with it. So it's kind of like a round-trip circle where it started off with philosophy, got into interesting sectors, and now it's back to the basics: hey, we're introducing new players into this space, and we want to make sure that we do this right, that we make sure that we enshrine people's rights in code. And that's the way I look at cryptocurrencies, blockchains. It's really about that, about enshrining our rights in code. So that's a long story about how I got involved. I've been fascinated for a long time, and I'm captivated now. This is where I'm going to spend my life.

I love that, man. Yeah, it doesn't feel like work if you love what you're doing. It's clearly something you love, so I'm ecstatic you get to spend your career in it. And you mentioned privacy. Yeah, I agree with you, privacy now more than ever is pretty big on most people's radar. Like when we first started, back in 2020 you were mentioning, that's when I got into crypto myself. It was cool that we had these distributed ledgers; we could see exactly what's happening, where it's happening. And then we got these things like ENS where we could attribute names to our accounts, and now you could see who's doing what. But then it's kind of weird because traditionally, if you had a bank account, you wouldn't want somebody to see what you're doing and what smart contracts you're interacting with. I think that's kind of caught up to people now, where they're like, 'Oh, hold on a minute.' Even businesses who want to start going on-chain don't necessarily want other people to know what they're doing on-chain for regulatory reasons or whatever. So I guess, kind of to summarize, in your words, why do you think privacy has come into the forefront the last year, year and a half, and people are taking it more seriously now?

Yeah, so I think in the past year and a half, it's become more important because the institutions and companies, the big players in the space, want to get involved. They all have some sort of program if you've been paying attention within the past three years. Some of the biggest banks like JPMorgan already have their own finance protocols, even Sony has their own exchange that they own that most people don't even know exists. So all of the big players are getting into the space, and they realize they can't reveal sensitive data about their clients, things like what are their balances, what is their positioning, what is their strategy in investing in the market. So that's the reason why these privacy conversations are starting to come up, because we realize in order for us to bring everyone on-chain, we have to be able to maintain their privacy, maintain their private data, but also enable them to engage in online transactions. And that's kind of why Midnight actually exists; it's because we've created this system where we can prove facts about your data and allow you to engage in on-chain transactions without revealing your underlying data. A lot of other players are starting to realize that this is the way to go about this particular problem of not revealing your client strategies or underlying assets. Everyone who has come to this realization has invested and built out zero-knowledge proof technology. So it's become an important topic over the past few years because everyone wants to get involved, they want to know how to do this the right way, and the right way is to be able to engage with on-chain transactions without revealing your personal private data.

Absolutely, absolutely. And yeah, I'm sure there's a whole slew of applications beyond normal blockchain transactions. You mentioned AI, people are training on your data for free and you're not getting attribution for that, or you might be seeing your inputs and outputs go out in the wild somewhere and you don't want that either. So yeah, there's lots of great applications for privacy for sure.

Yeah, and in the AI space, I mean, you and I have dealt with this before where there were some clients that we spoke to in the decentralized computing space, and they're like, 'Hey, we want to be able to run inference on other people's computers, but then I don't want my company's private data to be on that other person's computer and for them to be able to see it.' So that is a core problem that several businesses in the AI space are trying to figure out how to address: 'How do I allow these prompts or this information to be passed along without revealing my sensitive private information, whether that's healthcare information or financial information, but still allow agents and AI to engage with me?' So the basic premise of Midnight Network is all of your data stays on your device, right? So it never leaves it, it never goes onto a centralized server, and that is great not only for the user, but also for the business. Because if the business never holds onto your private data, then they alleviate themselves of the responsibility of managing that private data. And we've seen what happens with centralized databases: they get hacked, their employees sometimes mess with the data themselves (we've seen several cases where employees misuse that information), or more commonly in the past 5–10 years, people are being socially engineered to give up information. So they're being tricked to reveal information about people. So it's important that we first take the data off of these centralized databases, keep them on your device, and that's the key thing. If you don't have my data, there's nothing for you to lose, for you to hack, for you to give up. So that's the first step: all data stays on your device, whether it's your mobile device or your desktop. Now, consider sensitive information like my address, my age, things that I may not want to reveal. I may have to prove that I am of a certain age if I want to buy alcohol online, for example, but I may not want to necessarily reveal all these other additional details. So we keep the data on your local device, and then we generate proofs based on your data. So think about it as asking either yes-or-no questions about your data or trying to prove a fact about your data without sharing it. So rather than saying, 'This is my exact birthday,' the circuit or program that checks your birthday just says, 'Is this person over 18 or not?' And if it's yes, then they are allowed to proceed with the transaction and engage further. So the data stays on your device, we try to prove facts about your data, and that enables you to transact or update applications on the network. In practical terms, there's a function called a witness that looks at your data, it gets pulled into what we call a circuit, that generates proofs so that we can prove that a particular input was provided, that a particular program ran to check that data, and that acts as your proof on the network. Now, there's a couple of different design patterns that you can use to hide some of this data. The most common one that we see is hashing. So hashing is a way for you to combine several inputs of data, put it through an algorithm, and on the outside of that algorithm you get basically a string, 32 bytes of something. And it's completely random. But the only way that you can reconstruct that data is if all the inputs are exactly the same and the formula that you used to create that hash is the same exact thing too. So the only way you can recreate it is if you provide the exact same information. Now, if you don't know my birthday or my other identifying information, there's no way for you to recreate that hash. So that's a way for you to basically say, 'Okay, I know all of the secrets, I know my personal information. I can prove to you I have that personal information without necessarily actually providing it to you. All I have to do is run it through this algorithm, it matches what you have on-chain, and that's my proof right there.' So I basically showed you that I can regenerate that random string of characters, it matches what's online, that is proof, and now I can proceed with the transaction. So that's kind of the most common one that we see. There's a ton of other ones, but that's like the simplest form.

Fascinating, fascinating. And in terms of developers getting their hands on Solidity and starting to develop dApps and what not on top of Midnight Network, what are some—if we start with smart contract development—are there any transferable skills for EVM developers who are watching today to be able to develop on Midnight Network, or are there some gotchas?

There's definitely some gotchas, but then there's also some transferable skills, right? So the underlying protocol does use ZSwaps, right? So you have to understand UTXOs and the Bitcoin model and all these core pieces, but then we also have this layer built on top of it. Now, I think the easiest way for you to get involved is if you look at our cross-chain framework. So our goal is to be the privacy layer of all of Web3. And we've already built some tools that allow you to maintain some private data on our network, to engage with our protocol, but then also process transactions or updates on other networks. So if you come from the EVM space, I think the easiest way for you to get started is to look into our cross-chain framework called Effectstream. It already has templates where you can monitor transactions, events that are processing on other networks. Like we have a template for monitoring Cardano nodes, and if something happens on a Cardano node, then we can say, 'Alright, this allows you to do something on Midnight or update the state of a dApp on Midnight.' So it allows us to track what's happening on these other networks, and then based on that information, do something on Midnight. And we've already seen people build tools like M402 where their agents can transact on Arbitrum, but it's based on private state or sensitive state that's on Midnight. We also have a template in Effectstream where you can mint NFTs on Ethereum, but then pull them into a video game where they have different stats, but all those stats and the properties of those NFTs are actually on Midnight, not really on Ethereum. So that allows you to update the video game state on Midnight, but the actual assets are on Ethereum. So there's a lot of cool things that you can do, and if you use our Effectstream toolkit, you can get started with like three commands, and you already have something going.

That's awesome, man. Yeah, it seems like there's a lot of cross-chain interoperability going on. You mentioned Cardano, is it correct to say Midnight is kind of an L2 of Cardano, or what's the relation there?

So we are considered a partner chain of Cardano. We share SPOs, so the node operators that provide security to Cardano, they also provide security to Midnight. So that is kind of the nature of our relationship and how we started off with Cardano.

Gotcha, gotcha. Awesome, man. You kind of mentioned some of the use cases there. I'm curious to click into M402. I've been entrenched in the AI crypto cross-section for a while now. From what you're seeing, are you seeing a lot more emerging use cases on the agentic front? There's some obvious connections there where you'd want privacy attached to some of the things your agents are doing, especially if you're handing them your address or making purchases online, for example.

Yeah, I think the biggest thing coming up with agents that I see most commonly are decentralized identities: how do you know where this agent is coming from, what authority do they have to engage in a particular business transaction. And then we've seen some interesting things too where we have a team who's part of Build Club, which is our program that helps people take their ideas from pen and paper to production. What they've done is they created a Midnight version of DocuSign. And they started to engage with agents, saying, 'Okay, let's allow these agents to engage in contracts based on private information that they have on behalf of their users.' So there's a lot of interesting things like that where we're giving them identities, figuring out what their authorities are, enabling them to transact with other agents. And if you look at Midnight City, that's our version of testing all of it. It's a video game that's a simulated world and economy that is a preview of what will happen on Midnight. The idea here is we hope that all of the finance applications or gaming applications, you can test your products out in Midnight City, which is a simulated world and economy. And there are agents that you can spring up as individuals, give them tasks, commands, and they're all already living their own lives. You can see people post about it every day about their agents now with their family or doing all these crazy things—they're starting to trade, they're starting to farm. So yeah, there's a ton of interesting things happening with agents.

Yeah, absolutely. Identity is one of those interesting areas. I don't think there has been quite as much buzz and development around that area quite yet as there has been with how agents transact online and agentic commerce coming about. But the identity piece is interesting. Is an agent going to be an extension of yourself and thus the agent's identity tied to yours, or will an agent have their own identity, kind of like how a business is its own thing today when you register it with its own account ID and what not? So yeah, it's a very interesting space to keep an eye on for sure.

Oh yeah. This could go way beyond this topic. I do think that they will have their own personalities. I do think that they will act as actual agents, kind of like the way you would hire someone to do a job for you, which gets interesting, right? Because what happens when they start to have their own incentives, or they go a little bit rogue and realize, 'Oh, maybe I can achieve this mission by engaging in a contract that you didn't necessarily want me to, but this is my way of doing it.' So it's going to be fascinating to see what these agents do once they're out in the wild.

Yeah, interesting time to be alive. Coming back to Midnight Network, one other thing I wanted to ask you on, I've seen online and in the docs this notion of NIGHT and DUST. Could you explain what those two things are and how they relate to each other?

Yeah, sure. If you want to do deep dives, we have a ton of blogs and articles on this, and if you would like to look at our GitHub, all of our repos are open-source. So you can even see the original specifications that went into designing the token and the resource that is used. So NIGHT is our main currency for the network. That is what you pay for things with, that's how you transact; that is our main token that's available on exchanges like any other cryptocurrency. Now, DUST is what is used to pay for the transaction fees, so that's our equivalent of gas on another network. The main difference is that when you hold NIGHT, you generate DUST in your wallet. The reason why this system is important is because we separated the economic incentives of the actual token. If you have a token where you have to pay for fees in that same token, then it's kind of hard to operate a business because that fee is influenced by the congestion of the network, the activity, and it becomes almost unpredictable because it's fluctuating with price. So the cost to transact today may be a dollar, tomorrow $10. How do I plan a business around network activity that I have no control over? So DUST doesn't really have any value, it's not transferable, it's just generated as you're holding onto NIGHT. So that incentivizes people to hold onto NIGHT so that they generate DUST to process transactions. Now, what they can do is lease it to their dApps so that if people are making updates in their dApp, they can sponsor transactions for their users, make those updates without it influencing the price of NIGHT or anything that's happening on the finance side of the network. So those are the main two resources we have: NIGHT is the cryptocurrency, the value token; DUST is the resource that's used to process transactions on the network.

Gotcha, gotcha. Folks, if you're wondering and want to deep dive more into any of the topics Jay has mentioned, all those resources will be in the description of the podcast below, so definitely go check that out if that's something that piques your interest. Jay, as we come close to time here, I know you're a die-hard Web3 developer. For people watching today, whether they're just starting their journey in development or want to start a company at the intersection of privacy, crypto, or AI, is there any word of advice you'd be willing to give them?

In Build Club, these are generally what I tell the teams trying to get their businesses off the ground. First, make sure you slim down on your scope. Whenever I talk to new developers, they're like, 'I want to build the next World of Warcraft, I want to build the next absurd application that's going to take over the world.' And whenever I was teaching people game development, I would say, 'Hey, you could try to build the next World of Warcraft, spend billions of dollars, a massive team, it's going to take the rest of your life to get there. Or you could be the person that made Flappy Bird that pressed one button on screen, generating millions of dollars. Keep it simple.' And that's generally what I tell developers: focus on one particular value add and max out on that. That's generally the first step I tell people. The other thing is look at the newer opportunities. On our network, I think the difference between us and a lot of other networks is the ability to launch shielded assets. So that is a brand new landscape that people aren't really even exploring yet; some people don't even know it exists. I see people talking about Zcash and all these other tokens. For me, I'm like, I don't think you realize that you'll be able to launch your own private tokens on the network if you start digging into what we're actually doing. So to me, that's a brand new landscape. We're also experimenting with a lot of things like offer files where you can pre-sign a transaction. Let me say you have a launchpad and you want to launch a new token. One of the problems with launchpads is that you give your money over to a particular asset and it's kind of locked there up until they either meet their milestone or graduate to a DEX in cases like Pump.fun on the bonding curve. But with offer files on our network, we can say, 'Okay, I will commit a certain amount of money to your token if you meet a certain threshold.' And once you meet that threshold of, let's say, $1 million, then the actual transactions start to settle instead of me handing that money over. So it's like I give you the intention, I let you know what I'm willing to give you money for, and then once you actually get the commitment from all the people you need to, then it settles. So we're experimenting with a lot of different unique features within ZSwaps, shielded tokens, shielded contracts. Exploring opportunities that are brand new, a landscape that hasn't been explored before, that is always the best opportunity you can have. Keep it super simple, deliver on something short, and try to figure out how to make money as fast as possible. A lot of developers tend to create things that they love, that they're fascinated about. I've created a ton of tools that have one user, that no one cares about, that I spent months building, and I'm like, 'This is awesome,' and no one else cared about it. Focus on what value you're trying to provide, addressing particular needs, solving people's problems, and trying to figure out what does it take to get a customer to give you money as fast as possible, because that means you're providing something of value to them. Double down on that, keep it simple. Those are generally what I tell teams.

Yeah, absolutely. I love that. If you're watching today and on the fence of starting a new endeavor, what Jay said should resonate with you and help you take the first step to start building out your dream there. As we're at time, what's the best way for folks to keep up to date with Midnight Network and yourself? I know you guys are going to be at Token2049, want to give a shoutout there?

Yeah, sure. We'll be at Token2049 next week. We have three different events: Enter the Night (a networking event), Privacy Pitched where you'll be able to see some of our builders and community pitch (it's going to be an exciting pitching event), and then we have a dinner with private investors. So we have a ton of things going on with Token2049. As far as keeping up with Midnight, we have YouTube, Discord. I highly encourage you to join Discord; we have a great community. If you're tinkering with anything, you have people who are willing to help you with programming, marketing, anything you can think of. People are willing to hop in immediately and help you out. The team's in there, so if I see something coming up I'm interested in, you'll see me chime in on everyone's conversations, say what's up to people. Join our Discord, follow us on Twitter, LinkedIn, YouTube; we have a lot of content going out there. And reach out. I go by Jay Albert everywhere online. You can find me on LinkedIn, Twitter, Discord. All my DMs are open. I talk to every single person, even if you've never touched programming. I am 100% confident I can take someone who's never touched programming to launching an application on our network within a few hours. So reach out if you have any ideas, let's work together.

Excellent. I think there's no better way to end the podcast than that. Yeah, folks, if you want to get in touch with Jay, that information on how to do that is in the description of the podcast below. I can attest Jay is a thrill to talk to, so definitely do that if you so choose.

And with that, Jonathan, thank you so much for taking the time out of your busy day and crossing time zones here to chat with us today. Really appreciate it, and we're looking forward to seeing what you guys continue to build with Midnight.

I appreciate you having me on this. It's always awesome to brainstorm, talk to people about Web3, so I appreciate the opportunity and I appreciate your friendship, for reaching out and always keeping me in mind. I appreciate it. Absolutely, man, my pleasure. And with that, I wish everybody a happy week. Hopefully you have an awesome week ahead, and we will catch you back here next week for another great episode of DevNTell. Until then, have a good one folks. Cheers. See ya.