To keep the token supply secure between Midnight and Cardano, some rules have been defined called variants.
The purpose of these rules is that even if tokens move between the two chains, the total supply is never disturbed.
In the initial phase, Cardano cannot directly observe midnight but still the system is designed in such a way that the balance of supply is maintained.
A one way bridge will be introduced in the first stage.
In this stage when tokens on Cardano will move from unlocked state to locked state, to Midnight will observe the movement. Then Midnight will change the amount of tokens from locked to unlocked on its chain so that the balance is maintained.
Once the network is further developed and block rewards begin to be distributed, Cardano will release tokens from its reserve. These tokens will move from reserved state to locked state.
Midnight will observe this and unlock the same quantity of tokens from the reserve on its own, so that the block rewards system works properly.
Going forward, as development and network conditions allow, the system will be further upgraded and a two way bridge will be established. In this stage Cardano will also be able to observe the token movements occurring at midnight.
If at midnight the tokens move from unlocked to locked state, Cardano will move the tokens from locked to unlocked accordingly on its own.
The main purpose of this fully staged rollout is to introduce cross chain token movement step by step but maintain the core rules of supply at each stage.
This way, even if tokens are moving between Cardano and midnight, the system will always ensure that the total supply remains secure and accurate.