Midnight Foundation and Sig Network have partnered to bring programmable privacy to Ethereum applications without moving user assets to another blockchain. The partnership announcement says the integration lets applications retain Ethereum liquidity while shielding user balances, identities, and transaction records on Midnight, with independent signers authorizing transactions requested by Midnight contracts.

That focus addresses a basic property of public blockchains: every transfer is permanently recorded, and wallet activity can be traced across applications by anyone analyzing the ledger. The setup supports private trading through Uniswap and pooled lending through Aave. Developers can apply selective disclosure to satisfy compliance requirements, and Sig Network's stagenet already handles Ethereum deposits, swaps, lending, and withdrawals.

How Sig Network Connects Ethereum and Midnight

Sig Network gives a Midnight contract control over an Ethereum account through a signing process. A Compact circuit validates each user request, burns the corresponding shielded claim, and queues an Ethereum transaction.

Independent signers then produce an Ethereum signature through a threshold system, and no single signer can authorize a transaction alone, so the signing process does not depend on any single operator. Ethereum processes the transaction, and its outcome returns to Midnight, where the user's balance is updated.

Assets remain on Ethereum throughout the process, and nothing is bridged or wrapped, avoiding the bridging step that has been a recurring security weak point across the industry. Transaction amounts and timing on Ethereum stay publicly visible, but individual balances and transaction histories remain shielded on Midnight.

Gareth Christian-Lim, director of growth at Midnight Foundation, said the arrangement combines privacy with accountability. Applications can disclose records when required, according to the announcement.

Private Trading and Lending Without Leaving Ethereum

The integration supports several potential applications, including private trading through Uniswap and pooled lending through Aave. Orders can be combined on Midnight before the pool executes the net amount on Uniswap. Pooled deposits can likewise generate lending income without publicly linking individual depositors to the pool.

Applications can also support private positions on prediction markets and perpetuals venues. Shielded deposit and withdrawal tools can use one-time addresses to avoid reusing addresses across transactions.

David Millar-Durrant, CEO of Sig Network, said developers can add privacy without rebuilding existing applications. Teams can introduce private pools first, then move additional strategy and routing logic onto Midnight.

Compliance Controls and Developer Tools

Midnight contracts define accepted deposits, screening requirements, and disclosure permissions. Applications maintain records on Midnight's ledger and can use selective disclosure to reconcile ownership without exposing information publicly, an approach that builds auditability into the contract layer rather than treating privacy and compliance as separate concerns.

Sig Network is live on Midnight stagenet, supporting Ethereum deposits, Uniswap swaps, Aave supply, and withdrawals. Developers can import the Signet module into Compact and queue transactions directly from circuits. The repository includes an ERC-20 vault example, deployment tools, and integration tests. MinoCrab, an experimental embedded language, also compiles the same contracts using standard Rust tooling.

Because the integration currently runs on stagenet rather than Ethereum mainnet, its path toward production deployments, and which teams are first to ship private pools with the Signet module, will be the development to follow.