What is Secret Network? (SCRT)

Summary of Secret Network

  • Secret Network is a blockchain protocol with privacy-preserving smart contracts that enable decentralized applications (dApps) to perform encrypted computations. 
  • The interoperable blockchain improves upon traditional smart contracts by encrypting inputs at a protocol level.
  • Secret Network nodes implement data privacy controls within an application that enables developers to build dApps that protect user data.
  • Participants who own SCRT, the native cryptocurrency of Secret Network, can create and vote on community-led governance proposals.

Secret Network is an interoperable blockchain protocol with privacy-preserving smart contracts. It enables decentralized applications (dApps) to perform encrypted computations by maintaining privacy at the input level. With a user’s personal information encrypted, they are given greater control over how their personal information is shared. 

Secret Network improves upon traditional smart contracts by encrypting inputs at a protocol level, maintaining privacy for information collected within dApps. This differs from many other blockchain networks, as Secret Network encrypts user data before storing it in a smart contract.

Programmable privacy is the primary feature of Secret Network. The platform is home to a network of nodes that securely perform the computation of smart contracts built on the protocol. These nodes implement the data privacy controls that enable developers to build dApps that protect user data. 

SCRT is the native cryptocurrency of the network, which is used to participate in on-chain governance, pay for network transactions and earn rewards for securing the network via staking. 

what is secret network (SCRT)

Who created Secret Network?

Initially named Enigma, Secret Network underwent a rebranding in 2020 following an on-chain community vote. The original project was founded in 2017 by two Massachusetts Institute of Technology (MIT) graduates, Can Kisagun and Guy Zyskind. 

Kisagun was a Business Analyst at McKinsey & Company prior to launching Secret Network and holds an MBA from MIT. 

Zyskind has an extensive history in blockchain, having earned his Master of Science at MIT and then as a Research Assistant at its Media Lab. Zyskind went on to teach MIT’s first cryptocurrency-related engineering class. 

In January 2022, Secret Network announced it had raised $400 million as part of its growth initiative, Shockwave, which is aimed at establishing the platform as a critical pillar and data privacy hub for Web3. 

The funding consisted of two parts — $225 million in contributions for an ecosystem fund as well as a $175 million accelerator pool designed to provide non-dilutive capital and grants to individual developers and startups. Funds were raised from 25 prominent investors including Alameda Research, CoinFund, HashKey Group and DeFiance Capital.

How does Secret Network work?

Secret Network allows for the transformation of smart contracts into secret contracts. Input data is kept hidden — even from the nodes that verify blockchain activity. 

The Secret Network protocol breaks up sensitive data and distributes it in an encrypted format across nodes who then use it to perform computations without exposing the data itself. This intricate functionality is essential for protecting sensitive data and giving dApp developers the opportunity to build valuable privacy-preserving solutions at scale. 

Every node operator on the Secret Network is equipped with specialized hardware for running code in their computer’s Trusted Execution Environment (TEE). 

A TEE is a protected area inside a main processor where code can be run securely and privately. No one, including the device owners or administrators themselves, can access the raw information being decrypted and processed within these enclaves. 

Nodes, which form the infrastructure of the Secret Network protocol, use asymmetric encryption before committing data to the blockchain as transactions. Notably, encrypted data can only be decrypted and accessed from within the TEE by the receiver of that information. When the computation is complete, the output is recorded on-chain. 

Blocks are created and appended every six seconds with a soft limit of 22 transactions per second (TPS). Theoretically, the network can process 10,000 TPS according to the Secret Network team.

While Secret Network has its own consensus and on-chain governance processes, it is built atop the Cosmos SDK framework and leverages proof-of-stake (PoS) via Tendermint’s Byzantine Fault Tolerance (BFT) consensus algorithm. 

Cosmos SDK is an open source software development kit designed for building application-specific blockchains. Tendermint’s BFT algorithm, in the context of Secret Network, refers to a partially synchronous network model which keeps nodes in agreement about the validity of information stored on the network. 

Importantly, nodes in the network must stake SCRT to operate. However, token holders that do not wish to take up this responsibility can bond their stake to nodes as a delegator. Delegators earn a share of network fees by supporting validators. 

Why does SCRT have value?

The value of SCRT is largely tied to the continued innovation and development of the Secret Network platform. 

On February 21, 2022, the project launched SecretDAO, a decentralized autonomous organization (DAO) platform designed to provide tools to create tokens, build treasuries and enable DAO members to initiate community-led governance proposals using generated tokens. 

One day later, SCRT Labs (the founding core development team behind Secret Network) announced the launch of play-to-mint non-fungible token (NFT) platform Legendao. Legendao gives users access to Secret Network NFTs against the backdrop of a gamified experience.

Shade Protocol — built on top of Secret Network — also closed a $5 million private funding round in February 2022. The capital is being used to support the creation of privacy-preserving decentralized finance (DeFi) products on its parent platform. 

This development could serve to expand the adoption of Secret Network’s SNIP-20 token standard within the industry — a specification for tokens based on smart-contracting platform CosmWasm and the Secret Network.

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Why buy SCRT?

A primary feature of Secret Network’s SCRT token is its distinctive focus on governance. Participants can create and vote on proposals, such as community tax rates, using SCRT. 

SCRT holders are also able to bond their tokens to a specific node with the potential to earn rewards as a delegator.

dApp creators who want to use private information without compromising a user’s personal security may choose to perform computations on encrypted data through Secret Network. Since SCRT is used to pay for network transaction fees, it’s expected that demand for the token will naturally rise as more users adopt the platform. 

In addition, those that believe the team behind Secret Network will continue to reinforce privacy protections for user information may hold SCRT with an expectation of expanded adoption.

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