Some on-chain designs are actually quite clear with a set of real-world logic.
$NIGHT in the selection of block producers for the Midnight Network does not directly consider how much you hold, but looks at your ADA staking amount on Cardano. This idea is fundamentally simple: the new network has no historical data, so it borrows a system that has been running for many years to determine who is more reliable.
These SPOs on Cardano have already been filtered by the market over the long term. Node stability, operational capabilities, and reputation can already be traced. The higher the ADA staking amount, the greater the interests tied behind it, and the cost of misconduct or negligence is also higher. Compared to selecting based on NIGHT holdings, this method is clearly safer and harder to manipulate by short-term funds.
The key is the incentive design. Becoming a block producer for Midnight will not affect their earnings on Cardano; ADA rewards are still received, and NIGHT rewards are actually an additional increase. The participation cost is almost zero, making it an easy opportunity for SPOs to participate.
Of course, this mechanism is not perfect. Historical performance can indicate the past but does not necessarily represent current investments. Especially in the early phases with higher subsidies, even with minimal maintenance input, one can still obtain most of the rewards.
However, from an overall perspective, this path of "borrowing trust first and then adjusting incentives" is actually a very realistic and clever choice. Getting the network's security and participation up and running first, then gradually optimizing the details, is more effective than pursuing perfection from the start.