# Lending Protocol on Midnight

**URL:** <https://forum.midnight.network/t/lending-protocol-on-midnight/1046>\
**Category:** Product Feedback\
**Created:** [February 25, 2026, 2:49pm UTC](https://forum.midnight.network/t/lending-protocol-on-midnight/1046 "2026-02-25T14:49:17Z")\
**Posts on this page:** 1\
**Page:** 1

<div class="post-metadata">

**Author:** ![tusharpamnani](https://yyz2.discourse-cdn.com/flex010/user_avatar/forum.midnight.network/tusharpamnani/32/498_2.png) [@tusharpamnani](https://forum.midnight.network/u/tusharpamnani)\
**Post date:** [February 25, 2026, 2:49pm UTC](https://forum.midnight.network/t/lending-protocol-on-midnight/1046/1 "2026-02-25T14:49:18Z")

</div>

I’ve built a **privacy-preserving collateralized lending protocol on the Midnight Network** using Compact 0.28.0 and midnight-js 3.0.0.

The protocol allows users to:

- Deposit **tNight** as collateral

- Mint a synthetic stablecoin ( **pUSD** ) against that collateral

- Maintain a minimum **150% collateral ratio**

- Repay debt and withdraw collateral

- Liquidate undercollateralized positions

All **collateral and debt balances are private** , enforced via **zero-knowledge circuits** , while global protocol totals remain public for solvency verification.

Conceptually similar to MakerDAO, but fully adapted to Midnight’s ZK-first architecture.

* * *

# What I Have Successfully Built

## 1️⃣ Compact ZK Smart Contract

- Written in `lending.compact`

- 5 circuits:

- Collateral ratio enforced via multiplication constraints:

- 30 unit tests passing using an in-memory LendingSimulator

- ZK keys + bindings generated via `npm run compact`

* * *

## 2️⃣ Full Backend (REST API – Express)

Located in `lending-api/`

### Wallet Endpoints

- Initialize / restore wallet

- Get balances and addresses

- Wait for funds

- Register DUST

- Get DUST balance

### Contract Endpoints

- Deploy new lending contract

- Join existing contract

### State Endpoints

- Public protocol state

- Private position state

- Health check endpoint

### Action Endpoints

- Deposit collateral

- Mint pUSD

- Repay pUSD

- Withdraw collateral

- Liquidate position

BigInt values are serialized properly, errors categorized with `errorType`.

* * *

## 3️⃣ React Web Frontend

Located in `lending-ui/`

Pages:

- Setup (wallet + deploy/join)

- Dashboard (public protocol state)

- My Position (private state + ratio health)

- Actions (deposit/mint/repay/withdraw/liquidate)

UX features:

- Live ratio preview while typing

- Color-coded health indicator

- ZK proof loading feedback

- Auto-refresh

- Error classification

- Dark themed UI

Frontend communicates with the backend via typed API client.

* * *

## 4️⃣ CLI Interface

Fully functional terminal version with:

- Wallet creation / restore

- Contract deploy/join

- DUST monitoring

- All 5 lending operations

- Private position view

- Public protocol state view

Works in:

- Standalone mode (Docker local stack)

- Preview

- Preprod

* * *

## 5️⃣ Proof Server Integration

Using:

```auto
midnightntwrk/proof-server:7.0.0

```

Via:

```auto
docker compose -f proof-server.yml up

```

System expects proof server on:

```auto
localhost:6300

```

* * *

# Current Blocker

The **entire system works locally in standalone mode and via CLI** , and the UI + API also run correctly in dev.

However, I am currently stuck at:

- Proper backend deployment (API server)

- Proper proof server deployment

- Understanding best practices for:

I want guidance specifically on:

- How to deploy the backend properly

- How to deploy or host the proof server correctly

- How production architecture should look for a Midnight ZK dApp

* * *

That’s the current state of the project.