Secret Network – Blockchain With Programmable Privacy
We are going to introduce you to a crypto asset from our new Fumbi Staking Portfolio, the Secret blockchain. Its main goal is to allow its users to manage their privacy. Secret Network empowers users to own their financial information and share it only with those they trust.
The History of the Secret Network
The original incentive for the creation of the Secret Network came from the community behind the Enigma project. The motivation of the group of developers was the creation of a public and, at the same time, decentralised blockchain that would allow privacy to be returned to users of distributed blockchain networks.
Project Enigma raised $45 million in 2017 through an initial coin offering (ICO) to develop the project. In May 2020, the project was rebranded as Secret Network, with Enigma MPC, the company behind the development of the original Enigma protocol, as one of the leading development groups involved in the development of the protocol.
The Secret Network was built using the Cosmos SDK and runs on the Tendermint Proof-of-Stake consensus algorithm. The main network of the Secret Network was launched on 13 February 2020.
In the second half of June 2020, the Secret Foundation, in cooperation with the team behind the Enigma project, announced the launch of a testnet called Secret Games. This test network was primarily used to perform load tests (so-called stress tests) before the implementation of the hard fork called Vulcan, which definitively launched the function of smart contracts on this network.
What is Secret Network?
Secret Network is an innovative blockchain network that offers highly scalable smart contracts without permission (so-called permissionless smart contracts) with built-in privacy, bringing new possibilities for creating applications that cannot be realised on other public blockchains. The network empowers its users to take ownership of their financial information and share it only with entities they trust. It is the first protocol ever to start using private smart contracts on its main network.
Secret Network is built on the Tendermint SDK, which brings interoperable privacy to the entire Cosmos network. It uses a combination of Intel SGX (Software Guard Extension) and Trusted Execution Environment technology, several encryption schemes and innovative private key management for network users. Intel SGX splits the protocol into two parts. The security part is responsible for processing sensitive data through the TEE (Trusted Execution Environment) technology algorithm, which an ordinary person can encounter, for example, if they unlock his smartphone with his fingerprint. However, the Secret network has a blockchain node instead of a processor.
Comprehensive Overview of Secret Network
This network has many specifics that no other blockchain has. With the launch of the main network, it became possible to create private smart contracts with encrypted network status as well as encrypted input and output data. Such functionality made it possible to create the so-called secret alternatives to existing functionalities.
Secret tokens are encrypted versions of native tokens of the SNIP 20 standard, with which network users can cooperate in various applications. At the same time, third parties cannot trace any data about these tokens. This data can primarily be monitored only by the user through so-called tracking keys. Using these keys, the user can view his balance, for example, but only after signing the transaction with these keys.
A third party can potentially access such information only if the user allows them to do so. These tokens include, for example, Secret Network protocol tokens or tokens that have been moved to this network.
One of the key goals in developing the Secret network is to connect the networks with existing users and liquidity pools. Through these bridges, users of other networks have the opportunity to “mint” secret tokens even though they come from other ecosystems. Such functionality allows extending the activity to other blockchains without the need to incur excess costs for the development of additional protocols. Instead, just create a bridge and connect the existing structures.
There are currently four bridges leading to the Secret network; from Binance Smart Chain, Ethereum, IBC, and Monero.
Source: Secret Analytics
NFTs (Non-Fungible Tokens) allow property rights to be stored and distributed on the blockchain. NFTs on the Secret network allow the storage and distribution of given rights with a chosen degree of privacy to a designated user. In April 2021, the first Secret NFT standard SNIP-721 was created. These tokens have essentially the same properties as NFTs on other networks; however, they bring new possibilities, such as:
- The ability to anonymise the ownership of rare NFTs,
- privatise metadata (the way signature data is attached to the relayer, an off-chain database that also verifies the transaction, but independently of the oracle system)
- access control to the attached content.
Such options could be used in practice by, for example, artists who would adjust access to their works, for example, based on the price of a ticket to their exhibition (those who would buy a cheaper one would have more limited access than those who would buy a more expensive one), or it could also be used in the adult entertainment industry.
Among the areas that can undoubtedly benefit from the implementation of secret tokens is decentralised finance in the form of private contracts. In the case of the loan protocol, it is possible to autonomously provide loans to users without the need for public disclosure of their transactions. One could say that Secret Network allows transactions to be executed similarly to Ethereum with elements of transaction anonymity similar to Monero and the interoperability of blockchain networks built on top of the Cosmos SDK. Thanks to these features, the possibility of validators profiting from MEV (Miner Extractable Value) is also reduced as they do not have the opportunity to include transactions in the block of their choice since they themselves do not know its details.
The Steps for Using the Secret Network
1. We will make a transaction to the Secret network through the IBC/XMR/ETH/BSC bridge.
2. We will wrap the token that we sent in a SNIP-20 token, the so-called sTOKEN (if, for example, we wrap ETH in this way, you will receive sETH after wrapping).
3. We can start using the network.
Smart Contracts in the Secret Network
Smart contracts are created in this network on a multichain smart contract platform called CosmWasm (Cosmos WebAssembly). These contracts are written in a module that is easy to plug into the Cosmos SDK. Thus, any developer, or possibly a more experienced user, can create such contracts without much difficulty. This smart contract platform is written in the Rust programming language, but the possibility of natural implementation of other languages is planned in the future.
The advantage of these smart contracts is the so-called intra-blockchain contracts. This means that contracts on this network can send information without having to trust the blockchain from which the transaction originates. CosmWasm adopted the so-called Actor model, by which messages in the blockchain are sent in the burn-and-forget fashion, making many types of hacker attacks impossible.
The Secret Network Ecosystem
The most famous protocols operating on the Secret Network include, for example:
- Shade protocol – a DeFi protocol that connects DeFi applications with a focus on privacy. The interesting thing about this protocol is that it allows the minting of the SILK stablecoin. SILK is the first collateralised stablecoin on the Secret network with an unusual peg of $1.05.
- Sienna swap – The first crosschain swap on the Secret network. It allows you to trade and anonymously borrow over 70 tokens.
- Secret Invoice – A system that allows you to send and request payments from your suppliers/customers completely anonymously. It is the very first contract of this type on the blockchain.
- Shinobi protocol – a bridge that will allow Bitcoin to use the Secret network. As with other bridges, users exchange BTC for sBTC and can start using this network.
- Cosmostation – This is a non-custodial multichain wallet that works as a browser extension supporting the Cosmos ecosystem, EVM ecosystems and also other layers of Ethereum, such as Arbitrum or Optimism.
The Network’s Native Token – SCRT
SCRT token is, as with other first-layer blockchains, a token that is used for payment of transactions, staking, or voting on protocol management. However, the SCRT token is not natively anonymous. It becomes anonymous only after wrapping to sSCRT.
For users, this means that activities on the network are visible on the chain, but the metadata remains anonymous. In other words, in the chain explorer (e.g. in mintscan) it will be possible to see your transaction, but no third party will be able to say with certainty that it is your transaction (if they do not have the tracking key).
Another mark of the secret token is that it has an unlimited supply that is dynamic. Current inflation is 15%. This inflation will remain at this level until the ratio of staked SCRT coins to unstaked reaches above 66%. Once the amount of SCRT staked exceeds this level, inflation will automatically begin to decrease to the level of 7%. The current staking reward is around 23% APR.START INVESTING