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Blockchain News

Midnight Expands Zswap Infrastructure With Celestia Integration

The setup gives Midnight a shared system for discovering Zswap offers while providing data availability guarantees and reducing development requirements.

Written By Iyiola Adrian
Edited by Shubham Soni
Published 2026-08-25·Updated 2 months ago
Make The Crypto Times preferred on GoogleGoogle
Midnight Expands Zswap Infrastructure With Celestia Integration
AI Summary
Show
Users gain private asset exchange without revealing identities, protecting financial privacy in decentralized markets.
Shared offer pool reduces barriers for new wallet developers, expanding access to secure swapping services.
Eliminating separate gossip networks lowers maintenance costs, potentially lowering transaction fees for everyday participants.

Midnight Network, a privacy-focused blockchain backed by Cardano’s Input Output Global (IOG), is using Celestia’s data availability layer in its Zswap infrastructure to distribute swap offers across the network, replacing a dedicated peer-to-peer (P2P) messaging layer for offer discovery.

Under the design, Zswap offers are published to a shared Celestia namespace that wallets and applications can monitor. Celestia says the approach gives participants a common source for discovering offers while retaining Zswap’s confidentiality features.

New case study: Midnight Network is using Celestia's data availability layer as a replacement for peer-to-peer networking, not just for storage.

The result for Midnight was shared liquidity by default. Every Zswap offer lands in the same namespace, readable by any wallet or app.… pic.twitter.com/VJXA9cOUGm

— Celestia (@celestia) August 24, 2026

The integration was detailed in a Celestia case study published in June and highlighted again by Celestia in an Aug. 24 post on X.

Celestia takes over Zswap offer distribution

Zswap allows users to create offers to exchange one asset for another without exposing their identities or unrelated balance information. The challenge is distributing those offers so potential counterparties can discover them.

Rather than maintaining a separate gossip network for that process, Midnight posts open Zswap offers to Celestia. Other wallets or applications can retrieve the data from the same namespace. Celestia describes the approach as using data availability (DA) infrastructure for a function traditionally handled by P2P networking.

Once an offer is committed by Celestia’s validators, participants can retrieve it through the network. Celestia says its availability model is backed by cryptographic commitments and Byzantine fault-tolerant guarantees.

Shared liquidity comes from a common offer pool

The architecture also changes how Zswap offers can be accessed across different applications. Because offers are published to a common namespace, wallets, marketplaces, and other applications indexing that data can access the same pool of available offers. This removes the need for each venue to maintain a separate pool of offers.

Celestia said this creates shared liquidity across venues using the system. A new application can therefore read existing offers rather than establishing a separate P2P network and building its own pool of counterparties. The arrangement does not mean Celestia operates a centralized order book. It provides the data-distribution layer through which offers can be published and retrieved.

How a Zswap offer moves through the system

A user first creates a private Zswap offer specifying the assets they want to exchange. The offer is then posted to a designated Celestia namespace. Once the data is available, another participant can retrieve the offer and construct a matching transaction. The two sides can then be combined into a balanced swap before the completed transaction is submitted to Midnight’s layer-1 network.

The discovery process does not require the original parties to communicate directly with each other through a separate P2P channel. Zswap’s confidentiality mechanism limits the information exposed during the process, according to Celestia’s case study.

Fibre provides the required capacity

Celestia’s argument for using DA as a networking layer depends on the amount and cost of data that can be processed. The company said its Fibre upgrade enables throughput of up to 1 terabit per second and significantly expands the amount of data that can be posted to its network. Celestia argues that the higher throughput and lower per-blob costs make DA-based message distribution practical for workloads that previously relied on conventional P2P systems.

Traditional P2P networks use gossip to relay transactions and other messages between nodes. That approach is generally best-effort, meaning a network does not receive the same type of cryptographic availability guarantee for every message.

With DA, the data is posted to validators and backed by commitments that allow other participants to verify and retrieve it.

Midnight avoids maintaining a separate gossip layer

For Midnight, the main infrastructure change is that Zswap offer discovery no longer requires a dedicated gossip system. The Celestia case study says this can reduce the engineering work associated with building, maintaining, and debugging P2P infrastructure. Instead, Midnight can use Celestia’s existing data-availability network for the distribution of Zswap offers.

The model also separates offer dissemination from settlement. Celestia handles the availability of the offer data, while the completed swap is ultimately settled on Midnight’s network. That distinction allows applications to discover offers from a common data source without moving settlement activity away from Midnight.

Charles Hoskinson, co-founder of IOHK and the Cardano platform, commented on the partnership, saying, “It’s great working with Celestia. Great team, great ecosystem, great tech.” 

It's great working with Celestia. Great team, great ecosystem, great tech https://t.co/sz0pQDGtb4

— Charles Hoskinson (@IOHK_Charles) August 24, 2026

DA could serve as a networking layer for other applications

The Midnight integration is presented by Celestia as an example of a broader use of data availability beyond its conventional role in blockchain scaling. Under the model, applications that need reliable data dissemination can publish messages to a namespace and allow other participants to retrieve them rather than maintaining their own gossip infrastructure.

The approach depends on sufficient network capacity and low enough costs to handle the volume of messages normally carried by P2P systems.

For Midnight, that infrastructure is being applied specifically to Zswap offer discovery, giving wallets and applications access to the same set of offers while the underlying swap remains subject to Zswap’s privacy and settlement mechanisms.

Also Read: Solana Opens Landmark Governance Votes on Constitution, Token Supply and Fees

Disclaimer: The information researched and reported by The Crypto Times is for informational purposes only and is not a substitute for professional financial advice. Investing in crypto assets involves significant risk due to market volatility. Always Do Your Own Research (DYOR) and consult with a qualified Financial Advisor before making any investment decisions.

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