This noon I just ordered a portion of braised pork rice, and while scrolling through the news, I saw that a certain old-school DeFi protocol suffered millions in bad debt due to a robot 'colluding' during collateral liquidation (conspiring to lower prices).
Everyone focuses on the front-end trading slippage but overlooks the bloodiest backyard of Web3 finance—liquidation auctions.
On a fully transparent public chain like Ethereum, liquidation auctions are 'open'. Several top MEV robots can see each other's bids; they simply don’t compete, directly reaching an agreement in the memory pool to take the liquidation assets at a very low discounted price, offloading massive losses onto the protocol and retail investors.
I used hardcore investment research logic to analyze the application scenario of @MidnightNetwork and found that it can completely resolve this deadlock during the Kūkolu mainnet phase: a ZK-based 'full-chain dark auction'.
Using Compact language, liquidators can generate ZK proofs locally and submit bids. The network only verifies that you 'actually have this money in your wallet', but your specific bid is sealed in a private state. Only when the auction countdown ends will the smart contract decrypt and randomly select the highest bid.
【Investment Insights】: This directly physically destroys the robots' collusive monopoly! If Midnight can serve as the underlying infrastructure for the entire network's lending protocol liquidation backend, it will recover hundreds of millions of dollars in value loss for the DeFi ecosystem each year. This hardcore B-end financial necessity is precisely the strong pump for the long-term valuation of $NIGHT .
【Risk Warning】: Of course, liquidation requires millisecond-level response. If in extreme market conditions like '312', the speed of generating ZK proofs on the device side cannot keep up with the speed of liquidation, the dark auction will become a 'waste bid', triggering more serious systemic risks. This is a performance gap that Midnight must overcome.
Stop just focusing on the slight fluctuations of the front-end K-line. The truly top-tier institutions have long been studying how to use Midnight's underlying dark auction pool to 'reduce dimensions and pick up bargains'. Do you smell the aroma of this infrastructure-level broth? #night
