Cardano founder Charles Hoskinson admitted that blockchain networks have structural weaknesses despite having years of ongoing technical development since the “1st generation” Bitcoin blockchain debuted.

Hoskinson spoke candidly about the challenges facing Cardano in a YouTube broadcast from Input Output Hong Kong channel on Friday. The American entrepreneur explained that while the platform has achieved significant technical advancements, certain areas have lagged behind and require focused attention. 

“Other ecosystems and their members consider Cardano a shadow chain, call our blockchain a laughing stock, and actively criticize it. So that’s the underlying systemic weakness,” he said.

Cardano’s ecosystem has to expand, Hoskinson says

The Cardano founder reiterated that the project’s long-term success depends on expanding its decentralized finance (DeFi) ecosystem and attracting more developers. He talked about a need for marketing the project, admitting that Cardano’s public image has suffered from underpromotion.

Hoskinson insisted marketing is part of building a sustainable blockchain ecosystem, listing plans to improve Cardano’s brand recognition through annual events by hosting at least four major gatherings each year starting in 2026. He believes that better engagement will help overcome the perception that the blockchain is secondary to other networks.

“While decentralized value transfer is great and programmability is essential, this cannot work for large groups of people unless scalability, interoperability, and governance are addressed,” Hoskinson said. 

During the broadcast, the 38-year-old blockchain dev was writing on a whiteboard where he wrote about Cardano’s Midnight sidechain, a privacy-oriented project meant to connect Cardano with other blockchains, including Bitcoin, Ethereum, and Binance Smart Chain.

Midnight could increase the liquidity of ADA and other native tokens by enabling integration with external ecosystems like a sidechain.

According to Hoskinson, the total value locked (TVL) on the Cardano network currently stands at $680 million, with over 1.3 million people participating in staking and asset management. Collectively, these users hold more than 15 billion ADA tokens. The founder predicts that by 2030, the network could exceed 10 million users if it implements Midnight’s privacy features.

Interoperability issues in the Cardano blockchain identified

Charles Hoskinson reckoned that there were three critical areas where blockchains come up short despite their improvements in the last decade and a half, including rational privacy, identity, and cooperation.

Rational privacy allows users to selectively disclose information rather than hiding all data or revealing everything publicly. It activates controlled sharing on-chain, like allowing a doctor to access medical records or a university to verify transcripts without exposing sensitive data to the world.

Midnight could also help in combining decentralized identifiers (DIDs) with privacy-preserving proofs for humans, devices, and assets to authenticate without compromising personal information, research Hoskinson said was conducted by the IOHK Foundation.

Existing blockchains operate in isolation, but Midnight proposes a cooperative model, letting networks share security, users, data, and economic benefits. This approach, per the Cardano and Ethereum foundation co-founder,  could improve Cardano’s ecosystem through EMURGO’s commercial infrastructure.

Midnight could protect user data without making functionality expendable

According to Hoskinson’s whiteboard explainer, Midnight brings several innovations to protect user data in tandem with a blockchain network’s functionality. Kachina, its selective-disclosure smart contract system, allows devs to determine which transaction elements are public or private, behaving more like real-world interactions.

Nightstream, a post-quantum, GPU-accelerated privacy layer, uses hardware gains from GPUs to make privacy proofs faster and cheaper. It avoids dependence on ASICs and ensures the sidechain scales with mainstream computing developments.

Fully Homomorphic Encryption (FHE) allows computations on encrypted data without decryption. Combined with lattice-based cryptography, it enables validation, analytics, and coordination while keeping user data private.

Hoskinson coined the architecture a “continuation of research-driven cryptography” fronted by IOHK and its academic partners.

Moreover, Midnight will integrate W3C DIDs with rational privacy to create a universal, private authentication that can represent humans, AI agents, IoT devices, and digital or physical assets. He concluded the presentation by saying that identity without privacy leads to surveillance, while privacy without identity creates unusable systems. 

“Everything that we’ve built leads to this destination if we’ve done it right. It’s the very top. You don’t use cryptocurrencies for the sake of using cryptocurrencies. You use them because there’s a purpose,” Hoskinson said.

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