Strengths and Weaknesses
- Anonymization - by using "secret contracts," users can decide whether to publish their data or not
- CosmosSDK - this package provides better flexibility and scalability for the blockchain
- Social media - the Secret Network team is very active on social media
- SCRT coin - the maximum supply of the coin is not specified
- New blockchain - Secret Network is relatively new and has not yet gained as much trust as more established blockchains
The Secret Network blockchain runs on the Delegated Proof of Stake consensus (DPoS) and offers a unique solution for securing user privacy in the blockchain world. One of the main benefits of this network is the ability for users to take control of their financial information and only share it with those they trust. This opens up new possibilities for blockchain use cases that were not possible within public systems.
Built using the Cosmos SDK development toolkit, the network brings interoperable privacy to the entire Cosmos ecosystem, utilizing a combination of Intel SGX Trusted Execution Environment technology, encryption schemes, and key management to ensure standard privacy for blockchain users. It provides complete data privacy through encrypted smart contracts, improving traditional smart contracts by encrypting inputs and outputs at protocol level, and ensuring privacy for all sensitive information in decentralized applications.
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Functioning of the Chain
Secret Network has prepared several videos to explain how this blockchain works.
Trusted Execution Environment (TEE) is a secure, isolated space within a device that allows applications and code to run separately from the main operating system with an increased level of security. TEE uses hardware and software components to ensure the integrity, confidentiality, and availability of information.
TEE is separated and isolated from the main operating system, which means that applications in TEE can be launched and run without affecting the operating system. This ensures higher security and data protection.
In practice, TEE can be used for many different purposes, such as storing passwords, encrypting data, user authentication, protecting digital rights, managing payments, and much more. Because it enables applications to run with a higher level of security, it can be used for secure transactions within payment systems or for securing sensitive data in the banking and finance sector.
- June, the first mentions of the Secret Network (then known as Enigma) appeared
- Enigma launched an ICO, raising 45 million USD
- February, Secret Network was launched in the CosmosHub ecosystem with 20 validators
- September, smart contracts with encryption of inputs, outputs, and states were deployed
- December, a bridge between Secret Network and the Ethereum blockchain was launched
- February, Secret Network launched the DEX Secret Network
- November, the IBC was implemented into Secret Network
- December, the NFT marketplace Stashh NFT was launched
- January, Secret Network launched a 400 million USD ecosystem support program
- February, the SCRT coin was listed on major exchanges (Kraken, Huobi, Kucoin)
- May, the Shockwave Alpha upgrade was released, introducing the CosmWasm module and inter-chain accounts. The set of active validators also increased to 80
- December, the Shockwave Omega upgrade was released, increasing contract throughput and improving network security
At the end of January, Guy Zyskind, the founder of Secret Network and CEO of Secret Labs, took to the project’s forum to accuse Tor Bair, the founder of the Secret Foundation, of not disclosing the sale of the foundation's financial assets and paying himself a hefty dividend (2 million USD). Zyskind claims that the Secret Foundation sold a significant amount of SCRT for tens of millions of dollars and Bair used some of the proceeds as a dividend. This issue caused some large validators, such as Smart Stake, Kingnodes, Azul Collection, and Domerium Labs, to leave the network.
Smart Stake stated that the Secret Foundation's policy was not a decisive factor in their decision to stop validating the chain. Rather, their decision to leave Secret Network was mainly due to problems with the network's underlying technology. A mandatory firmware update from Intel was problematic for many validators, and several of them stopped operating. Others, such as Azul, Domerium, and Kingnodes, also suspended their Secret validators due to various issues. Kingnodes cites the unprofitability of their validation as their reason for leaving.
Guy Zyskind - Co-Founder and CEO
An alumnus of Tel Aviv University and former CTO of Athena Wisdom (now Endor), Guy is currently focused on blockchain technologies; specifically, the development of technology that enables secure, private cloud computing at scale. His goal is to enable researchers, companies, and governments to utilize data without having direct access to it in its raw form. He also teaches a course on blockchain technologies at MIT, which is the first engineering class on the Bitcoin blockchain, blockchain technology, and cryptocurrencies.
Can Kisugan - Co-Founder (Enigma)
A graduate of two top universities, Can holds an MBA from the MIT Sloan School of Management and a Bachelor's degree in Industrial Engineering from Northwestern University. During his time at MIT Sloan, Can focused on blockchain and digital currency technologies, which formed an important part of his professional interests.
He began his career at McKinsey & Company, where he worked for three years, primarily focusing on finance and banking projects. During this time, he gained a lot of experience in strategic planning and business development.
The native coin of the Secret blockchain is SCRT. Its usage includes:
- Paying fees
To vote on proposals, you need to download and install the SecretCLI application. Here is a How to Guide.
To create and submit a proposol you need to deposit an initial deposit of 100 SCRT coins within one week along with a name and description of the proposal.
Note that the SecretCLI application counts in uSCRT. The conversion is 1 SCRT = 1,000,000 uSCRT. To submit a proposal, you will need 100,000,000 uSCRT in SecretCLI.
Voting is based on the relationship between held SCRT and the voting rights of the holder. If a delegator does not vote, their validator inherits their vote. Votes are tallied at the end of the voting period (1 week), with each address being able to vote multiple times, but only the last vote counting. Voters can choose from four options - Yes, No, No with veto, and Abstain. The proposal will be accepted if it meets three conditions related to the vote ratio:
- Quorum - 33.40%
- Threshold - 50%
- Veto threshold - 33.4%
In total 148,334,100 SCRT coins are locked among validators as of February 24, 2023, with the first 10 out of 77 validators holding 42.59% of all locked coins. If only validators participated in a vote, it could be manipulated.
Revenue & Tokenomics
In 2020, the Secret Network blockchain raised 236 million USD through an ICO, and in 2022, it secured a further 400 million USD in funding from a single venture fund to support its ecosystem.
Revenue is generated from fees for using the Secret blockchain, which are then used to finance and develop the project. These fees can come from transactions on the platform or from staking SCRT coins. Estimated revenues for 2022 were approximately 4.5 million USD, which were used for employee payouts and Secret Network operations.
The SCRT coins are distributed as follows:
- 44% - Community
- 21.18% - Team
- 17.65% - Enigma and affiliates treasuries
- 11.76% - Ecosystem pool
- 0.59% - Foundation
- 4.71% - Inflation
The SCRT coin was created as part of the Secret Network blockchain and serves as a payment for the services provided by this network. The total number of coins in circulation as of February 24, 2023, is 196,389,234, and its total supply is not fixed.
A large number of these coins (148,336,306) is held in staking by validators. Validators are key players in the Secret Network blockchain, as they ensure transaction validation and block selection, receiving rewards in the form of new SCRT coins for their work. The number of coins staked by the validator servers as a guarantee of their loyalty and commitment of supporting the network, more coins staked higher guarantee.
The SCRT coin is an inflationary coin, and its parameters are dynamic. The current inflation rate is 15% as long as the staked to unstaked coins’ ratio stays below 66%. If the ratio of staked SCRT exceeds 66%, inflation gradually decreases to 7%.
The Uniqueness of the Chain
Secret Network allows for the creation of private, fungible versions of non-private tokens using the SNIP-20 standard. This means that assets like SCRT can be converted into a private, fungible version of itself, called sSCRT. Transactions made using such converted tokens, like sSCRT, remain private and anonymous. Native tokens on Secret Network are private by default, as are bridged coins and tokens from other networks, like sATOM, sETH and sBNB.
Secret Network utilizes Intel's TEE technology implementation - Software Guard Extensions (SGX). TEE refers to a secure area of the processor that is not accessible by other system components. It functions as a black box for computations, where the input and output may be known, but the state inside the TEE is never disclosed. By using SGX chips, it is not possible to see what is happening in Secret's memory space, giving chip owners and system operators strong cryptographic privacy guarantees. This ensures that all computations and data remain private and secure on Secret.
How the Network is Secured
The security of the Secret blockchain is managed by 77 active validators out of a maximum of 80 (as of February, 24 2023).
The Secret network utilizes slashing to punish dishonest validators.
Slashing for Downtime
Downtime slashing depends on actual block times, rather than theoretical block times defined by the network. If validators fail to sign at least the minimum number of blocks within each block window, they will be punished with a "slash" for this downtime.
This means that if a validator fails to sign at least 11,250 blocks in every 22,500 blocks, they will be punished.
Penalties for downtime:
- 0.01% reduction in the staked SCRT of the validator and their delegators
- Validators are “jailed” for 10 minutes. During this jail time, validators do not receive block rewards and must manually disconnect their nodes
Slashing for double signing
Double signing occurs when a validator signs the same block twice. This most commonly occurs during migration when a node is running on two computers simultaneously.
Penalties for double signing:
- 5% reduction in the staked SCRT of the validator and their delegators
- Validator that is tombstoned can no longer receive block rewards, and their delegators must re-delegate their SCRT to another validator
Bug Bounty Program
A bug bounty program is a special program that rewards security researchers and hackers for finding bugs and vulnerabilities in software or websites.
Secret Network plans to deploy a bug bounty program in the first quarter of 2023.
The Secret Network bug bounty program will focus on identifying vulnerabilities and bugs in the protocol code, as well as applications and extensions utilizing this protocol. The goal of this program is to increase the security of Secret Network and protect users from potential attacks and misuse. Details about the Secret Network bug bounty program will be published on the official blockchain website.
Own Node (Validator)
An own node is a computer system that runs 24/7 and is used for managing and securing Secret Network. Certain hardware requirements are needed to set up your own node to ensure that your system is powerful enough.
- 32 GB RAM
- 512 GB SSD
- Intel Skylake Processor (6th generation or higher)
- Motherboard with SGX support in BIOS
- 32 GB RAM
- 1 TB NVMe SSD
- 2 Intel Skylake Processors (6th generation or higher)
- Motherboard with SGX support in BIOS
It's important to keep in mind that an Intel processor is necessary to run your own node on Secret Network. Only Intel processors support the SGX function, which is essential for security. Processors from AMD do not support this function, so if you have an AMD processor, your machine will not be functional.
You can find a detailed guide on how to set up your own node here.
- Direct involvement in network security
- Rewards in the form of new coins
- Entry fees from delegates
You can easily delegate your coins to a validator using the Keplr wallet:
- Select “Secret Network” in the wallet
- Click "Stake" in the lower right corner
- You will be redirected to a page where you can select a validator
- Choose a validator
- Enter the amount of SCRT coins you want to delegate
- Click the "Delegate" button
When choosing a validator, it is important to consider several factors, including the commission rate that the validator charges for their services. It is important to note that a high commission rate can reduce the yields from delegation because a portion of the rewards earned will have to be paid to the validator.
Another factor that should be considered is the Annual Percentage Rate (APR) offered by the validator. A high APR means that delegators can expect higher yields for their delegated funds. In addition to commission and APR, other factors such as validator availability, reputation, and security should also be considered. It is important to verify that the validator is following the rules of the Secret Network and has not been penalized for violating those rules. You can check the validator, for example, here.
It is important to acknowledge that selecting the right validator can impact the overall yields from delegation. Therefore, all factors should be carefully considered, and a validator should be selected who is active, honest, and contributes to the long-term growth of Secret Network.
- No hardware required
- Rewards from validators
- Support for network security
Road Map can be found in PDF form here.
Secret Network is focusing on improving its cryptographic layer by incorporating additive homomorphic encryption and zero-knowledge proofs, Trusted Execution Environments (TEE), and Multi-Party Computation (MPC). Secret Network also plans to create a network of chains and become a liquidity center for projects that prioritize privacy, especially in DeFi. The Secret 2.0 Road Map includes developing various protocols and libraries to enable new uses for private DAOs, RNGs, threshold wallets, and stronger Secret NFTs.
The Secret Network DeFi ecosystem currently includes 4 dApps. Given the potential it brings for user privacy and anonymity, it is expected that Secret Network will continue to expand its ecosystem. Here are the top 3 dApps:
- Sienna Network - Privacy
- SecretSwap - DEX
- StakeEasy - Liquidity staking
Secret Network supports both new and existing developers on its blockchain. In 2022, a 400 million USD grant program was launched to support the ecosystem.
The Secret Network grant program is one of the key contributors to the development of the entire Secret Network ecosystem. It allows developers and teams with innovative ideas to receive the necessary financial support and help develop and improve Secret Network.
The Secret Network Discord community is a great source of information and direct contact with other members of the ecosystem. The Discord is divided into several sections, allowing easy navigation and access to various topics such as technical inquiries, DeFi projects built on Secret Network, or news and updates about the blockchain itself.
The community is very active and friendly, allowing for real-time exchange of opinions and problem-solving. If you have any questions or need advice on anything, you can turn to more experienced members of the community on Discord, who will be willing to help.
By following the Secret Network Twitter account and other key members of the community, users can quickly get information on news, events, and project development.
On YouTube, you can find many informative videos explaining the functioning of the entire Secret Network ecosystem. AMA videos are also posted regularly, which is a great opportunity for the community to get to know the developers and ask them anything that interests them. Other blockchains should take an inspiration out of Secret Network's YouTube channel. It shows how important it is to take care of the community and make information accessible in a friendly and accessible format. Thanks to this approach, the Secret Network community is strong and still growing.
- Band protocol
Keplr Wallet - SW wallet
Math Wallet - SW wallet
I really like Secret Network and its privacy-focused solutions. I believe that privacy is a crucial element for the success of cryptocurrency projects, especially in the era of CBDCs. Secret Network offers users the choice to be anonymous or not, which is a great idea. As people become more aware of the digital footprint they leave behind, I expect projects like Secret Network to gain even more popularity.
However, like any project, there are also some drawbacks. Recent disputes within the Secret foundation have caused some negative reactions and undermined the credibility of the entire project. People won't be willing to invest in an ecosystem where large dividends are paid out without community consent, especially if the project presents itself as decentralized. It is important for these project leaders to work on rebuilding trust and transparency so they can continue to grow and provide innovative privacy solutions.