The Midnight network is built around a dual-component tokenomics system that solves key usability issues in blockchain. It offers privacy by default and sustainable access without ongoing token expenditure. At the center is the NIGHT token, a utility asset designed for more than just speculation. It lets you use the network and make private transactions by generating DUST, and it also gives you a say in governance. This article explains how Midnight’s tokenomics work, why DUST matters, how distribution is handled, and what all of it means for you.
KEY TAKEAWAYS
➤ Midnight is a blockchain network designed to improve privacy and usability without speculative token fees.
➤ NIGHT (utility token) provides network access and governance, while DUST (generated by NIGHT) fuels transactions.
➤ NIGHT isn’t spent on transactions; instead, holding NIGHT continuously produces DUST, a non-transferable, decaying resource.
➤ NIGHT distribution occurs primarily via a community airdrop designed to be fair (Glacier Drop), prevent airdrop farming, and ensure gradual token release.
- What is the NIGHT token and what is it used for?
- What is DUST and how does it relate to NIGHT?
- NIGHT vs. DUST: How they differ
- How are NIGHT tokens distributed?
- How does NIGHT secure the network?
- How does Midnight tokenomics ensure fair network usage?
- What makes Midnight’s tokenomics unique?
- Frequently asked questions
What is the NIGHT token and what is it used for?
NIGHT is the native token of Midnight and plays a utility role in the network’s economy.
The NIGHT token has one job: give you access to the Midnight network. You don’t spend NIGHT on transaction fees. Instead, simply holding it lets you use the chain through a second resource called DUST.
In other words, simply owning NIGHT grants you ongoing access to Midnight’s services without constantly depleting your tokens for gas
It has an initial supply of 24 billion tokens, minted at the start of the token distribution (on the Cardano blockchain) and mirrored on Midnight’s own network at launch
Here’s what NIGHT is designed for:
- Generates DUST: NIGHT generates a renewable capacity resource called DUST, which is used for all Midnight transactions.
- Block rewards: NIGHT helps secure the network by incentivising block production. Block producers will earn NIGHT from a pre-allocated reserve.
- Governance: NIGHT holders will control protocol changes, treasury usage, and governance proposals through a decentralized system.
- Treasury funding: A portion of NIGHT is allocated to a protocol-owned treasury, eventually controlled by community governance.
- Multichain representation: NIGHT exists natively on both Cardano and Midnight. A cross-chain locking mechanism ensures 1:1 supply integrity.
In short, NIGHT is not a token you spend to use the network. It’s a token you hold to gain access to Midnight’s features and help steer its evolution.
What is DUST and how does it relate to NIGHT?
DUST is the capacity resource used to fuel transactions on Midnight. It is generated by holding NIGHT.
Instead of charging transaction fees in NIGHT, Midnight uses DUST. DUST is generated continually for as long as you hold NIGHT and designate a DUST address. The more NIGHT you hold, the faster your DUST balance refills.
DUST boosts privacy
A key benefit of holding DUST is privacy. DUST is a “shielded” resource: using DUST for transactions does not publicly expose your wallet address or other details in the way paying with a normal token would.
All transfers of NIGHT are public on-chain, but you can utilize DUST privately. This provides privacy for transaction metadata without turning the main token (NIGHT) itself into a privacy coin.
In practical terms, you maintain compliance and transparency with NIGHT, while DUST allows confidential network usage.
DUST is not transferable
It is also important to note that DUST isn’t a speculative asset or something to hoard. Once generated in a given DUST address, it can’t be sent to other addresses like a regular token — it stays in the designated address until it’s used or decays.
In fact, if you move your NIGHT from the generating address or if you un-designate the associated DUST address, it will decay over time and vanish if not utilized. This prevents anyone from stockpiling unlimited transactions and potentially spamming the network.
DUST exists solely to power operations on Midnight, and its supply dynamically adjusts to network usage. By designing it this way, Midnight ensures that network capacity is used for genuine activity and not controlled by speculators.This model solves a key usability issue: you can estimate your future transaction capacity just by looking at your NIGHT balance and current network conditions.
In a nutshell:
➤ By default, you do not spend NIGHT to use the network.
➤ DUST is shielded. Your transaction metadata isn’t exposed publicly.
➤ “Orphaned” DUST decays if unused. If you transfer your NIGHT or redesignate your DUST address, the old DUST begins to expire.
➤ DUST is non-transferable. This prevents speculation and ensures DUST is used for network access, not hoarding.
NIGHT vs. DUST: How they differ
| Property | NIGHT | DUST |
| Role | Utility token | Capacity resource |
| Transferable | Yes | No |
| Used for t/xs | No | Yes |
| Supply cap | 24 billion | Unlimited, renewable |
| Privacy | Public | Shielded |
| Generates | DUST | — |
| Decays | No | Yes (if detached from NIGHT) |
How are NIGHT tokens distributed?
100% of NIGHT tokens will be distributed to the public via a multi-phase airdrop called Glacier Drop. There’s no token sale or VC allocation.
Glacier Drop is a novel airdrop model, designed for inclusion, that unfolds in stages to maximize fairness and gaming-resistance. The distribution targets users from eight major blockchain ecosystems – Bitcoin, Ethereum, Cardano, BNB Chain, Solana, Ripple (XRP Ledger), Avalanche, and Brave’s Basic Attention Token community.
This way, Midnight aims to bootstrap a broad and diverse user base from day one by extending across multiple networks (rather than concentrating tokens in the hands of a single community or insiders).
So, basically, all NIGHT tokens are being distributed to the community using a three-phase process:
1. Glacier Drop (60 days)
You can claim NIGHT for free if you held $100 worth of ADA, ETH, BTC, SOL, BNB, XRP, AVAX, or BAT in a self-custody wallet at the time of a past snapshot. If your funds sit within an exchange or other custodian, then the custodian must choose whether or not to participate and make a claim on their users’ behalf.
2. Scavenger Mine (30 days)
Anyone who missed or was not eligible for the first claim phase can earn unclaimed tokens by completing computational tasks. This process invites broader participation.
3. Lost-and-Found (4 years)
Even if you missed the first two phases, if you were eligible for Glacier Drop, you’ll have a chance to claim a portion of your original allocation using a self-directed mechanism after mainnet launch.
Redemption and thawing
The “Redemption Period” controls how your NIGHT tokens unlock after a successful claim.
Allocations are frozen at first, then unlocked in four equal parts (25% each) over 360 days. The first thaw happens randomly between days 1 and 90, and each subsequent thaw follows at fixed 90-day intervals.
For example, if your first thaw is on day 25, the next three would fall on days 115, 205, and 295.
This staggered unlock prevents a sudden flood of supply hitting the market all at once. In practice, it helps reduce volatility and encourages people to stick around and engage with the network long-term rather than just dumping their tokens.
How does NIGHT secure the network?
NIGHT will be distributed as block reward for block producers to incentivize security and independent validation.
Midnight uses Cardano’s Partner Chain model. At mainnet launch, block production will be handled by a permissioned set of nodes. Over time, the network will move toward a more permissionless model.
Here’s how rewards will work:
- Block rewards come from a fixed Reserve of NIGHT.
- No new NIGHT tokens will be minted.
- Rewards decrease over time based on a disinflationary curve.
- Each block reward is split into a fixed subsidy and a variable portion.
- The fuller the block, the larger the share of the variable portion that goes to the block producer.
- The remaining share of the variable rewards goes to the Treasury.
This design rewards block producers who include meaningful transactions while discouraging empty or self-serving blocks.
How does Midnight tokenomics ensure fair network usage?
Transactions are fueled by DUST, which is a renewable and shielded capacity resource
DUST fees consist of three parts:
- Minimum DUST: A small amount is always required to prevent spam.
- Congestion multiplier: Adjusts based on network usage from previous blocks. If blocks fill up, fees rise. Conversely, if blocks are empty, fees drop.
- Transaction weight: Based on computational resources required.
What makes Midnight’s tokenomics unique?
To cut a long story short, Midnight separates ownership from usage, creating predictable access and avoiding speculative fee dynamics.
Compared to most blockchains, Midnight introduces:
- No pay-per-use token drain. You don’t lose tokens just to transact.
- Fair launch. No token sales or VC rounds. Everyone has a chance to participate.
- Dynamic reward incentives. Block producers get more by filling blocks efficiently.
- Inclusive access models. DApp users don’t need to hold or even know about NIGHT.
| Thanks to transaction sponsoring, DApp users don’t need to hold NIGHT. In fact, they don’t even need to know that they are using a blockchain. Apps can choose to cover transaction costs on behalf of users by using their own DUST reserves. This makes onboarding much smoother, especially for non-crypto-native users who expect web2-like convenience. It also supports real-world adoption by removing friction at the user level. |
All these factors combine to make Midnight better suited for real-world adoption, where predictable fees, privacy, and fairness are critical.
Frequently asked questions
Can you use Midnight without owning NIGHT?
What makes Midnight different from other blockchains like Ethereum or Solana?
How is Midnight’s token distribution different from typical airdrops?
Coinbase
eToro
eToro
eToro
eToro
COCA wallet
UpHold
Disclaimer
In line with the Trust Project guidelines, the educational content on this website is offered in good faith and for general information purposes only. BeInCrypto prioritizes providing high-quality information, taking the time to research and create informative content for readers. While partners may reward the company with commissions for placements in articles, these commissions do not influence the unbiased, honest, and helpful content creation process. Any action taken by the reader based on this information is strictly at their own risk. Please note that our Terms and Conditions, Privacy Policy, and Disclaimers have been updated.
