Secret Network (SCRT)

Secret Network is a privacy centered L1 built with Cosmos technology

Basics

• Fka Enigma (ENG), although it is marketed as 'one of the teams working on SCRT'.
• Founded in: 13-8-2017 (Enigma) or even 2014
• Mainnet release: Privacy-preserving smart contracts are now live on Secret Network (15-9-2020). Privacy tokens went live on 29-10-2020.
• Based in:

History

SEC Ruling

• From CoinSpice (19-2-2020):

"The US SEC (Securities and Exchange Commission) settled charges against Enigma, a dApp privacy-focused ICO, for selling unregistered securities. Enigma agreed to return the $45 million raised in their ICO to investors, and register their offering with the SEC. Also, Enigma will pay the SEC a $500,000 fine. “The remedies in today’s order provide ICO investors with an opportunity to obtain compensation and provide investors with the information to which they are entitled as they make investment decisions,” declared John T. Dugan, Associate Director for Enforcement in the SEC’s Boston Regional Office."

• From this r/Buttcoin thread (20-2-2020):

"Enigma gets hunted down by SEC. Directly creates new token 🤫

Here's the link. ENG token got classified as a security, -25% today. So they moved to Cosmos and created SCRT token, leaving all bag holders in the dust. Shit never gets old..."

Someone else chimed in:

"There's no token swap. They just issued a new token (SCRT), gave it to a bunch of validators they liked, eg. binance and outlier ventures, and now that is the new token. The team has said explicitly they can't facilitate a token swap.

Hard to see this as anything but a really underhanded move on Can and Guy's part."

• From its FAQ (29-9-2020):

"Enigma is also the name of an ERC20 token (known as ENG) that was issued in 2017. At this moment, there are no entities developing technologies or networks based on the utilization of ENG. There is an ongoing community-organized swap between ENG and SCRT (the native coin of Secret Network) that is expected to last until at least the end of 2020. The swap is 1:1 between ENG and SCRT."

• From their blog (15-9-2020):

"The technology behind Secret Network’s “secret” smart contracts was developed by Enigma, a development company that builds and supports groundbreaking privacy-focused technologies and networks. Enigma has been researching and developing these types of technologies since CEO Guy Zyskind first published his privacy research papers at MIT in 2015, including "Decentralizing Privacy" and the first Enigma whitepaper. Years later, the importance of privacy to the blockchain space has been well established, and these original papers now have more than 1,500 combined citations."

Audits & Exploits

• Bug bounty program can be found [insert here]. None according to Blockchain Security DB (29-6-2020), which does show 1 audit(10-2017).

Bugs/Exploits

• Secret Network fixed privacy vulnerabilities in SNIP-20 tokens (3-2023).
• Within the Rekt telegram group there were mentions of a hard fork after an exploit (19-9-2021):

"Secret Network just had an "exploit". Someone dumped their coin just before the people running secret network shut down the chain, rolled it back and then moved onto a new chain. The secret swap site is still down but people with the know how are able to make swaps etc. The coin that was dumped before the rollback and switch from chain secret-2 to secret-3 is SEFI"

• From Blockthreat:

"On September 14, 2021 SecretSwap, a Secret Network DEX, was successfully exploited."

Governance

Treasury

• Has an Ecosystem Pool (28-12-2020);

"We’re launching a dedicated Ecosystem Pool that will provide a meaningful source of funding for projects and initiatives being built on Secret Network for years to come. As mentioned above, it will begin with 20M SCRT allocated to fueling Secret Network's growth and securing its sustainability.

Generally speaking, the Ecosystem Pool separates itself from the community pool in several ways. First, it is meant to support any activities that contribute to network interests as a whole and is not limited to supporting development activities (though this would play a major part). Second, given its magnitude (more than 20 times that of the current on-chain community pool), it can help support bigger and longer lasting initiatives. Specifically, here are some of the things we expect the Ecosystem Pool to assist with:

1. Supporting the upcoming reward mining campaigns (bridge and AMM liquidity mining)
2. Provide non-dilutive seed-stage support to companies building major applications on Secret Network. Unlike simple occasional grants, this is meant to help kick start serious teams and companies that dedicate themselves to building on the network. The benefits here will likely not be only financial, but will also include mentoring from existing community members and developers
3. Supporting major network improvements and products (e.g., secret oracles, light-client verification inside of secure enclaves, FHE and Differential Privacy integrations)
4. Community initiatives and events

In terms of initial governance, and in the interest of continuing our fast pace of evolution as an ecosystem, the pool will be co-managed by the Secret Foundation and Enigma. We are actively looking for ways to involve more parties in the community in the process of operating the fund. Seeing the success of other network committees, one such option would be to establish a dedicated Ecosystem Pool Committee which would proactively seek worthwhile endeavors or review proposals."

Token

Token allocation

• From this blog (28-12-2020):

Community 44.12%

Team 21.18%

Enigma and affiliates treasury 17.65%

Ecosystem pool 11.76%

Foundation 0.59%

Inflation 4.71%

Utility

• From its FAQ (29-9-2020):

"SCRT (pronounced "Secret") is the native coin of the Secret Network. This means SCRT is used to pay fees and transfer value on the network. Secret nodes must stake SCRT in order to operate on the network, and in return they receive fees and network rewards in SCRT. When nodes go offline, they can be "slashed" and lose a portion of their SCRT stake. Holders of SCRT who are not operating nodes may "bond" their stake to a specific node in order to become a delegator. Delegators have an opportunity to earn a share of fees and network rewards by supporting a particular set of validators.

Another utility for SCRT is governance of the network. Secret nodes can create and vote on governance proposals using SCRT, allowing for decentralized control of the network."

• From this blog (3-9-2020):

"dxSCRT – a staking derivative token on the Secret Network, which will be available on the public testnet in the coming weeks, as well as on mainnet with the launch of secret contracts.

What can dxSCRT mean for Secret Network? Right now, the unbonding time for Secret Network is 21 days. That means you need to choose between locking your SCRT for 21 days or missing out on block rewards entirely. Now there is going to be another option – deposit SCRT into a secret contract and receive dxSCRT, which is a secret token. In this case, dxSCRT represents your funds, staked by the secret contract, earning staking rewards over time. In addition, dxSCRT can also be exchanged at any time for SCRT."

Token Details

• Has SCRT and dxSCRT
• Secret (SCRT) - used for staking, governance, and network fees.

Tech

• Whitepaper can be found [insert here].
• Code can be viewed here.
• Built on: The network is based on Tendermint / Cosmos SDK. CosmWasm
• Programming language used: Rust

Transaction Details

• Capacity (TPS):
• Latency:

How it works

• From their blog (15-9-2020):

"This mainnet upgrade makes Secret Network the only blockchain running live smart contracts with encrypted inputs, outputs, and state. That is possible because every node operator validating the network activity uses a secure enclave – the same type of technology securing your fingerprint on your smartphone. You can think of Secret Network as combining the programmability of Ethereum with the privacy of Zcash. This capability for "programmable privacy" now allows developers to begin building their own permissionless and privacy-preserving “Secret Apps.”"

Upgrades

• From Figment (3-5-2022):

"Secret Network recently announced a scalability-focused partnership with Dymension, a modular settlement layer specializing in rollups. This partnership will allow the Secret ecosystem to scale faster than ever before."

• Supernova — Secret’s major mainnet upgrade launched is live (25-11-2021). It mainly enabled IBC.

Staking

• Several validators paused or stopped their operations due to allegations of a founder having frauded Foundation money (1-2023).

Interoperability

• From this blog (3-9-2020):

"They’re building connections to Ethereum, Cosmos Hub, and other networks, intending to bring the capacity for “programmable privacy” to the entire blockchain universe."

• From this Paradigm blog (16-12-2020):

"The Secret Ethereum Bridge is LIVE on Mainnet: Users can now get programmable privacy for their ETH and select ERC-20s. Plus: up to 2 million SCRT are expected to be available to support bridge mining and the launch of Secret DeFi."

It is not for all ERC20's. At this moment it is for WBTC and USDT, YFI, UNI, KNC, COMP, DAI and MKR, LINK and AAVE.

• Has its testnet live for a bridge between Secret Network, Polkadot and Cosmos (13-4-2021).
• Is nearing the launch of a bridge with BSC (12-4-2021).

Oracle Method

• Is integrating Band Protocol (25-2-2021).

Their Projects

• Catalyst is Enigma's first application
• Salad (an Ethereum coin-mixer) is built on Enigma. This is from before the move towards Cosmos.
• Proposed (14-2-2019) a new form of a Dead-Man’s Switch

SecretSwap (SEFI)

• Secret AMM. From The Defiant (3-2-2021):

“The Secret AMM has been deployed to testnet, paving the way for a mainnet release during the week of February 15th,” Secret Network said in a post. “It is the only front-running resistant, cross-chain AMM, providing lower fees and more privacy protections for users than Ethereum-based AMMs. The Secret AMM allows users to exchange any Secret Token for any other Secret Token.”

• Secret NFTs are live (9-4-2021) on the Secret Network. Similar to the SNIP-20 token standard, SNIP721s (Non Fungible Secret Tokens) are completely private. You can learn more about the use cases by checking out Secret Network's blog post.

• SecretSwap got live (2-2021);

"SecretSwap allows users to trade any secret token for any other. Smart contracts on Secret Network have encrypted inputs, outputs, and state, so miners are not able to front-run any orders submitted to the AMM. Tokens that users buy on SecretSwap can be transferred with privacy on Secret Network, used in other Secret Apps, or sent over bridges back to native chains, including Ethereum."

Roadmap

• Their Ecosystem roadmap can be found here (3-9-2021).
• From this blog (3-9-2020):

"The proposal to introduce secret contracts to mainnet will be made on September 8th, 2020. If passed by the community, the secret contracts network upgrade would take place on September 15th, 2020. This proposed upgrade would make Secret Network the first layer-one blockchain to enable general purpose private computation across a distributed system of nodes equipped with secure enclaves. For the first time, developers will be able to build and deploy “secret” smart contracts that can utilize encrypted inputs, outputs, and state."

Usage

Projects that use or built on it

• Humanode; From the announcement (4-12-2020):

"A private smart contract on Secret Network for private biometric decentralized key management. The user’s root private key is issued in the private smart contract so that nobody can get access to it."

Competition

• Oasis Network, Dune Network, Findora, and Aleo

Pros and Cons

Cons

• Discussions arose around The Foundation selling tokens and not being transparent, including founder Tor selling ~$2.56M worth of SCRT in 2021. From Decrypt (30-1-2023):

"Early troubles surfaced last year when it was revealed that the Secret Foundation was established as a for-profit corporation, as many had believed it to be a non-profit organization. Then, over the course of 2022, the community had grown increasingly frustrated with the foundation’s perceived opacity and lack of accountability. On August 1, the community passed a proposal aimed at enhancing transparency into the foundation’s finances. When December arrived with no response or action from the foundation, the broad plan to reform the foundation erupted into accusations of mishandling funds and alleged personal intimidation. The conflict came to a head on Friday when both Zyskind and Bair released statements on the community forum—Zyskind about an hour before Bair—in which they presented two contrasting narratives.

Zyskind alleged an OTC deal that resulted in a loss of about $250,000 in funds. He also said this was not reported to SCRT Labs or disclosed to the community until a year and a half later when Bair posted a thread acknowledging that this $250,000 OTC deal in June 2021 was a scammer impersonating Bair. However, Bair’s statement recasts the OTC trade of the foundation’s funds as a portion of his own SCRT that had been vesting since June 2020 and that would be distributed in December 2021. Bair says that instead of taking the payout in SCRT, he opted to sell the coins OTC so Secret Foundation could distribute the funds to him as a $2.625 million dividend.

Since Secret Foundation Inc. is a for-profit business registered in Illinois, it would not be unlawful for Bair to receive a dividend. Doing so would have required notice to shareholders, however, which does not appear to have been issued. Bair is also the sole shareholder. It would have also needed to be reported in the company’s tax filings, which Bair claims SCRT Labs reviewed."

Team, Funding, Partnerships, etc.

Team

• Full team can be found [here].
• Team comes from MIT
• Zyskind, Guy; CEO & co-founder Secret Labs
• Kisagun, Can; co-founder
• Tor Bair; "Founder / CEO" of the Foundation according to himself (28-1-2023). Lost lots of confidence within the community over unclear selling of SCRT and then trying to get back in with multiple proposals (30-1-2023).
• Has a Secret Foundation (turned out to be a for profit) and has help from Enigma. Also has SCRT Labs and Secret Agency. A vote passed (10-2-2023) to restructure the Secret Foundation into a non profit, with Secret Foundation’s founder and CEO, Tor Bair, committing his support.
• From their blog (14-9-2020):

"Enigma’s dev team worked really hard to build a compute module in parallel with Confio building CosmWasm."

Funding

• Alameda turned out to have invested $10M in exchange for tokens (8-12-2022).
• From their blog (19-1-2022):

"Firstly, we are happy to announce publicly for the first time that multiple top-tier investment firms have acquired SCRT positions and recently joined the Secret ecosystem as critical stakeholders, including: DeFiance Capital, Alameda Research, CoinFund and HashKey.

Secondly, we are revealing a new $225M ecosystem fund comprised of contributions from 25 existing ecosystem investors and partners targeted at expanding Secret Network’s application layer (including DeFi and NFTs), network infrastructure, and tooling.

Thirdly, we are announcing our $175M accelerator pool (funded in SCRT) that is designed to provide non-dilutive capital, grants, and ecosystem incentives to rapidly expand user adoption."

• From CoinDesk (4-5-2021):

"Several large venture capital firms have acquired a stake in SCRT. The position, amounting to $11.5 million, was led by Arrington Capital and Blocktower Capital and included Spartan Group and Skynet Trading."'

• Announced (15-9-2020) a partnership with an investment from Hashed Hashed joins other long-standing partners such as Fenbushi and Outlier Ventures.