TL;DR: With a new update or project being released almost every day, it’s clear the crypto ecosystem is constantly evolving. Secret has gone through a lot of ups and downs to reach the level it’s at today — but it’s just the beginning. Knowing what brought it here and why it was created will lead you to make better decisions when investing or simply using Secret.
In this article, we’re gonna dive into the Secret ecosystem, answer all the $SCRT related questions and even more. Prepare yourself for a history lesson and a journey to the future of Secret!
What is Secret (SCRT)?
Secret is a Layer 1 blockchain created in 2015 by Guy Zyskind and his team at SCRT Labs. It was created with the goal of providing customizable privacy for dapps building on top of the protocol. This means that Secret network has smart contracts powered by novel encryption schemes.
The concept of smart contracts has first been introduced by Ethereum in 2014. These are small applications that run inside a virtual machine called the Ethereum Virtual Machine. The EVM allows for a blockchain to process more than simple token transfers. To give more info, it opened up the possibility to run applications in a decentralized manner.
Applications usually run in the cloud or on your computer, so running them on a blockchain was unheard of at the time. This makes them uncensorable (nobody can stop them) and ensures they’re always online — as long as the chain they run on is processing transactions. In essence, Secret’s smart contracts achieve the same goal as Ethereum, with one major improvement.
The biggest feature of Secret is that it encrypts the inputs of the smart contract. This means any data used to run smart contracts remains shielded from anyone, except for the private key holder. To achieve its level of privacy, Secret leverages a piece of specialized hardware ran by its validators.
Every node in the Secret network runs their code though 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 use asymmetric encryption before committing data to the blockchain as transactions. Asymmetric encryption is an essential component of networks like Bitcoin and Ethereum. It ensures that transactions are legitimate and that hackers cannot access the funds.
The encryption key is automatically generated when you create a new wallet. It is commonly referred to as the “private key” and it acts like the password to your wallet. If the public key is used for encryption, then the corresponding private key is used for decryption. If the private key is used for encryption, then the related public key is used for decryption.
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 every six-seconds with an imposed limit of 22 transactions per second (TPS). Theoretically, the network can process 10,000 TPS according to the Secret Network team.
The consensus mechanism that Secret uses is based on Tendermint and it’s called Delegated Proof of Stake. Using Proof of Stake means that Secret gets its security from validators that stake $SCRT to secure the chain. This is different from Proof of Work blockchains, where miners replace the role of validators. Importantly, token holders that wish to participate in the consensus can delegate their tokens to validators, and earn a share of the staking rewards.
The concept of blockchains is not new, and Secret is one of many such networks. The idea started in 2008 with the release of Satoshi Nakamoto’s Bitcoin Whitepaper. This kicked off the subsequent creation of many different types of networks under the same “blockchain” terminology.
Despite being similar in concept blockchains have all different architectures and use cases. What all have in common — including Secret — is that they have to be secure. Security is the ability of a blockchain to prevent attacks and penalize malicious actors. This is usually done through their consensus algorithm and the mechanism they use to reach finality.
Finality is achieved when a block has been created and is now immutable, meaning that nobody can change the date inside. Secret Network achieves faster finality thanks to its encryption. Because even validators themselves can’t see the content of the transactions they are processing, there is no discrimination or front running. Every transaction will appear the same, and will be processed the same.
Over time many different mechanism have been designed, ranging from Proof of Work, Proof of Stake to novel ones called Proof of Spacetime. Each one hopes to achieve the best way of securing the network they are built for. As noted before, Secret makes use of type of consensus mechanism we call “Delegated Proof of Stake” — or DPoS for short.
Secret is powered by the SCRT token, a central part of the Secret ecosystem. SCRT is an inflationary token due to the way its tokenomics have been planned. This means that new SCRT coins are created with each block and the total supply gradually increases over time.
The Secret inflation rate sits currently at around 15%. Until the network reaches a critical number of validators to preserve privacy, the projected inflation will continue to increase to 20%.
Secret has no maximum amount of tokens that can be created. Out of the total supply of 190 million SCRT, 163 million SCRT are in circulation.
For more details about how you can earn more Secret by running a validator node at home check out our Secret Mining & Staking guide. It includes the exact steps and best methods of earning more crypto like $SCRT in 2024 and beyond.
When was Secret (SCRT) created?
Secret (SCRT) was created during Guy Zyskind’s academic journey at MIT. Work began on the Secret Network in 2015, but before that, a couple of important events happened.
Most events revolve around the Secret CEO and Founder, Guy Zyskind.
The first meaningful event is Guy Ziskind’s academic paper on cryptocurrencies, titled “Enigma: Decentralized Computation Platform with Guaranteed Privacy.” Released in 2015, it paved Guy’s way for a career in one of the most relevant industries to come — virtual distributed computing aka blockchains.
Enigma was designed to achieve a decades-old goal in data security known as “homomorphic encryption,” an encryption scheme where you can perform operations on the encrypted data without revealing its contents. This is in contrast to conventional schemes where the party doing the processing needs to have an unencrypted copy of the data, inherently reducing the security of the whole process.
Conventional encrypting schemes have long been applied to services like Google Drive and Facebook, which meant these companies had total control over the encrypted contents that were being sent, as they owned the decryption key.
With the creation of Bitcoin, Enigma’s encryption could be applied to cryptocurrencies to create a “black box.” Applied to a peer-to-peer network, nodes can send any data they want without revealing its contents.
Enigma’s technique mimics a few of the features of Bitcoin: it encrypts data by splitting it up into pieces and randomly distribute chunks of it to hundreds of nodes in the network. Each node performs computations of its discrete chunk before the user recombines the results to deliver the unencrypted answer.
Another meaningful event was the transition of Enigma from an academic paper into an actual product.
In 2015, Guy was just one of the 15,061 PhD students writing their dissertations on blockchain projects. His research work was affiliated with the MIT Media Lab, and their ethos was “deploy or die”— meaning that projects couldn’t remain purely academic. Getting working products into the hands of the community is the end goal.
In order to market the product, Guy Zyskind teamed up with his MIT colleague Can Kisagun, and together they created the codebase for Enigma Network. The first use case proposed in the Enigma whitepaper was a decentralized exchange coupled with an investment platform for crypto hedge funds. The product was called Catalyst.
Initially, Catalyst would work as an off-chain DEX, meaning that data would be processed on centralized servers to begin with. After a sufficient period of testing, data would be processed in a completely private manner, on-chain.
At that time, Monero was the standard blockchain in terms of privacy guarantees, but the network was only used for transactions. Driven by a lack of private smart contract implementations, they were looking to create a private version with extended functionalities. This is how Enigma was born.
What the Secret team created can be categorized as an off-chain environment able to process sensitive and private blockchain data with end-to-end encryption. After validating their idea, Guy Zyskind together with the team at MIT began building today’s Secret blockchain and codebase.
The protocol was first launched as Enigma with its corresponding $ENG token. The $ENG token was sold only through a private sale first, and then a public one. The private sale brought in $500,000 worth of funds to accelerate the growth of SCRT Labs. The next sale was a massive success, bringing in $45 million from retail investors. Such a huge investment has allowed Enigma to continue building the vision of a privacy-oriented currency.
Fast forward to 2020, Enigma expanded its vision and decided to become a privacy-as-a-service layer, as opposed to a simple privacy coin. This moment market the rebrand to Secret Network.
Who created Secret (SCRT)?
Secret Network was created by Guy Zyskind together with Can Kisagun during their academic journey at MIT.
Guy Zyskind is a software developer born in Israel. He worked in several IT companies and now serves as the CEO and Founder of SCRT Labs. Can Kisagun studied at the Tel Aviv University between 2007 and 2011, where he graduated with a Bachelor’s Degree in Electrical Engineering and Computer Science. In the following years, he obtained his Masters Degree in Science at MIT.
Guy Zyskind started his career working as Vice Editor-In-Chief, Director of Reviews at HWzone from November 2007 to November 2009 where he led Israel’s largest IT news website to peak traffic rates.
He then moved to work as a software developer at SAP where he innovated the first SAP Mobile Development Platform, which in one year became the group’s flag product and the only product to do so in the past decade. He also introduced advanced open source technologies, which significantly reduced operational costs and regulation.
Guy was the co-founder of CityOwls where he designed the core algorithms and alt="Can Kisagun">
Can Kisagun now serves as the Chief Product Officer at SCRT Labs. He studied at Northwestern University between 2007 and 2011, where he graduated with a Bachelor’s degree in Industrial Engineering & Management Sciences. In the following years, he obtained his Master of Business Administration (MBA).
Prior to founding Secret Network, Kisagun was a Business Analyst at McKinsey & Company. During his studies, Kisagun founded Streetdust. It was a business app for culturally intelligent street discoveries. After several months of development, he pitched the app to top VCs in Silicon Valley as the finalist of MIT Sloan's Entrepreneurship & Innovation Club's Pitch competition.
Can’s first contact with crypto was in 2014, when he first read about Bitcoin. Around that time, he heard about “Bitcoin 2.0,” which is essentially what we now call “smart contracts.” Coming from a background of corporate banking and accounting, Can immediately saw the opportunity to apply blockchain to Letters of Credit, which remain a complicated yet integral part of supply chain finance.
One of his most important projects was Eximchain. Launched in 2016, Eximchain developed a supply chain solution that aims to help enterprises connect, transact, and share information more efficiently and securely. The startup happened way before the blockchain hype took off, which is why Kisagun pitched his service to enterprises.
Eximchain is based on Quorum, the blockchain developed by JP Morgan. The crucial difference is that Eximchain implemented privacy features that were non-existent among enterprise blockchains at the time. In addition, it implemented experimental technologies such as Quadratic Voting. After graduating MIT, Can decided to leave the project and instead work with Guy Zyskind on this peculiar project called Enigma.
Can Kisagun and Guy Zyskind have first met at MIT. At the time, Guy Zyskind had just published the research paper for Enigma and was working to deploy the blockchain in the real world.
A challenge at the time was that in order for Enigma’s encryption method to work, it needed hundreds or thousands of users to participate. The goal was to have as many nodes that could process pieces of the encrypted information.
The first step was to gather enough validators in order to make the network resilient. They were the only nodes running at the time, but they needed many more participants to test the network.
The proof of concept was a decentralized data marketplace, called Catalyst, that would run on top of Enigma’s protocol. The first iteration of Catalyst would include a centralized data marketplace for crypto data, where founder will host our own data sets, as well as those contributed by members of the community, in return for ENG bounties. The transition to the data marketplace protocol would be gradual.
To advance their concept, Can Kisagun and Guy Zyskind pitched their idea to VCs, who invested $850,000 to get the development going. With fresh funding, Can Kisagun and Guy Zyskind went on to expand their team and turn their idea into a marketable project.
In 2020, Enigma was sued by the SEC for selling registered securities. From that day, they’ve rebranded to Secret Network to better reflect their mission: building a privacy-oriented ecosystem of dapps.
How is the Secret (SCRT) token used?
The SCRT coin is the native token for the Secret network. Most assets in the Secret ecosystem are denominated in SCRT, which makes it the default unit of account.
SCRT is the fuel that powers transactions and block creation on the Secret chain. We sometimes refer to it as “gas”. Its primary use case is securing the network and keeping actors aligned to the same principles. Because Secret has a quick time to finality and processes more transactions per second the gas fees quickly add up. This small fee is paid by users and goes to validators for doing their work.
Initially, SCRT was designed to work as a private payment method similar to Monero. With the addition of smart contracts, SCRT is also being used for paying network computation. This additional use case opens the possibilities for privacy oriented tools and dapps.
The SCRT coin is a public asset that can be tracked on-chain. The receiver and the balance are public by default. This means that interactions on the Secret network like: minting NFTs, AMM swaps and more will be shown on-chain.
Governance on Secret Network is powered by the SCRT token. Staking SCRT gives any network participant a vote in the ecosystem which is a very important utility of the SCRT token.
Users who want to take full advantage of Secret’s privacy features will have to swap their SCRT for sSCRT, a wrapped version of the token using the SNIP-20 standard. Hence, sSCRT is a privacy-preserving and fungible equivalent of SCRT. Whenever you transact using a wrapped token such as sSCRT, the transaction remains private and nobody knows whether you send/receive sSCRT to/from whom.
Secret is currently listed on multiple exchanges. The major ones are Binance, Coinbase and Kraken. If you want to skip ahead and learn how to earn more Secret by running a validator node at home check out our Secret Mining & Staking guide. It includes the exact steps and best methods of earning more crypto like $SCRT in 2022 and beyond.
Who is developing Secret (SCRT) now?
Development on Secret started in 2015 by a team who later spun out into SCRT Labs.
After validating their idea, Guy Zyskind and his team established SCRT Labs as a for-profit company with their headquarters in Latin America. Founded in 2015, SCRT Labs handles the development of the Secret (SCRT) blockchain and protocol. Besides handling the development of the core protocol, it is also tasked with handing out grants and help developers building on top of Secret.
The entire codebase was written by the core developers. This is because the encryption mechanism as well as the internal architecture has been in the works by experts for several years. Currently, their GitHub lists around 100 core contributors and their code has been forked more than 100 times. The code remains open source and is free to use by anyone, provided that the code for products based on Secret is open source as well.
Like any successful blockchain network, it was essential that Secret amasses a strong community of validators that could maintain the network. To attract validators and builders, SCRT Labs started offering grants. The initial sponsorship budget is $400 million, divided into two areas: a $225 million ecosystem fund for building dapps, infrastructure and tooling, followed by a $175 million accelerator pool funded in SCRT that is designed to provide grants, and ecosystem incentives to rapidly expand user adoption.
As part of the Ecosystem Fund, 25 partner organizations will deploy capital across the Secret dapp ecosystem, providing substantial experience, guidance, and ongoing mentorship. Some of the members include HashKey, Dragonfly Capital Partners, Alameda, Hashed, and many others.
Specifically for validators, SCRT Labs is offering sizable rewards for early testnet validators and the current ones. Funding comes from the protocol’s treasury and it’s part of the delegation program started in January 2022. Besides maintaining the network, validators are rewarded for providing liquidity to one of the many Secret bridges, and for creating better tools.
If you are interested to become a contributor to the protocol, you can sign up for their Secret Agent program, or the Secret Network Action Campaigns (SNACs).
In 2015, the team decided to launch Secret Foundation, a private organization that would receive 4% of the block reward to fund operations. Its board of members is…secret, for now. The Foundation is tasked with the marketing, branding, community, social presence, accessibility, and most importantly growth of the ecosystem. Their mission is to drive the global adoption of open-source privacy technologies.
Governance of the Secret Network is done on-chain. This means token holders have a say in the direction of the protocol via Secret Network Improvement Proposals (SNIPs). New dapp ideas and infrastructure work is being funded from the community pool, over which SCRT holders decided.
The community pool is funded from an on-chain staking tax, 2% of the token inflation on the network is send to the community pool address. To get funding from the community pool one needs to submit an official governance proposal
Secret’s protocol parameters remain hardcoded and only the core team can change them. This is because of the privacy implications of the protocol. An outsider that gets too close to the team’s internals represents a major vulnerability for the protocol’s privacy. Protocol upgrades are done by the core team only, and then publicly shown on their GitHub.
What are the latest updates on Secret (SCRT)?
Secret in 2020
2020 was an eventful year for Enigma. In between a lawsuit and its mainnet, the community went through an emotional rollercoaster.
Enigma entered in a litigation with the SEC, who accused them of issuing security tokens. In order to continue focusing on the development, the Enigma team agreed to pay a $500,000 fine for selling unregistered security tokens. As part of their obligations, the team had to return the funds they raised in their $45 million ICO from 2017.
On February 13, just days before the SEC settlement, Secret Network had launched its mainnet on the Cosmos chain. However, the community wasn’t happy to have the project name associated with the SEC. In order to accommodate Enigma’s new direction, people have voted to rebrand to Secret Network.
Until that point, Enigma was a privacy-enhancing network for transactions running on Ethereum. Thanks to some major breakthroughs in research, the team was able to extend the blockchain’s privacy features to smart contracts. Secret Network abandoned Ethereum and decided to build on Cosmos instead. In addition to the less expensive fees on Cosmos network, the Secret team gained access to a more powerful development tool in the form of Cosmos SDK.
The SEC drama had evaporated, and with a new name, Secret network began testing its smart contracts. With support from over 80 validators, Secret Contracts went live on September 15. This upgrade would make Secret a layer 1 blockchain with private computational capabilities. Essentially, Secret Contracts enable anyone to use their private data in dapps without revealing the raw data. Data being used in computations throughout Secret Network simply can’t be public.
By the end of they year, things were finally looking good for Secret. The network was secured by 48/50 validators, and the SCRT tokens had been released on mainnet. Users could benefit from the privacy of the network by locking their SCRT tokens in the smart contracts and receiving the secretSCRT token, which couldn’t be traced. The next step was to create adoption for their network.
One of the first infrastructure initiatives was to build a bridge to Ethereum. While Cosmos enables interoperability with its native blockchains, called zones, it was still isolated from the rest of layer-1 blockchains. Bridges help connect blockchains by locking an asset on one network, and issuing the corresponding asset on the other. The Secret bridge allows users to create a synthetic ETH or ERC20 tokens on Secret that can be used with full privacy, at lower cost.
From a technical perspective, the bridge was managed by bridge operators, making it centralized. Some of the Secret bridge operators include Figment, Staked, and B-Harvest. But for the Secret community this was less of a concern, as it brought much needed liquidity to the Secret network.
Secret in 2021
2021 was Secret’s best year to date, reaching an all time high of $10.64. This was heavily influenced by a few key events and updates.
In the beginning of the year, Secret bridge mining rewards went live. With 500,000 SCRT allocated to the ETH and ERC-20 bridge pools, users were encouraged to swap their ETH for secretETH and vice versa. This was the beginning of a bigger movement going on. Secret was laying the foundation for its own DeFi ecosystem, where users could use the privacy features of the network to its full extent.
What followed was a series of DeFi integrations to facilitate interoperability with other networks. Wrapped SCRT (wSCRT) went live along with a liquidity pool on Uniswap. A bridge has been created with BNB Chain and with Polkadot. They also launched SecretSwap, their own native Automated Market Maker (AMM) to create more liquidity for SCRT.
All these efforts paid off handsomely, as Secret Network reached a peak TVL of $130 million. In order to bootstrap liquidity, more than 2 million SCRT tokens have been pledged in the form of LP rewards.
An interesting integration was with Monero, the OG privacy coin. The Secret Monero Bridge was bringing programmable privacy to Monero’s coin. By developing the cross-chain Secret Monero Bridge, the team hoped to include the Monero community to Secret’s growing DeFi ecosystem.
The team’s next milestone was to create a bridge with Bitcoin. Dubbed Shinobi Protocol, it would make it possible for Bitcoin holders to access Secret DeFi in a way that has never been possible before. With Shinobi there is no middleman, and the peg in/out actions communicating with Secret Network are no different from ordinary transactions on the Bitcoin blockchain.
Shinobi Protocol is governed by the SHINOBI token holders, who participate in verifying the cross-chain transactions between SCRT and BTC. A small amount of $SHINOBI is required to unlock the originally locked BTC in return for SBTC, thus creating the sustainability and value model for Shinobi Protocol and the development team.
The NFT trend came to the Secret Network towards the end of the year. The catch (you guessed it) is that Secret NFTs can be private — only the owner can decide whether to share them to the public or not.
Interestingly, Quentin Tarantino was the first to issue his NFT collection on Secret. Tarantino’s initial collection features 7 uncut Pulp Fiction Scenes as NFTs. Alongside the extremely rare collection, a new drop was announced. This collection included up to ten, iconic, unique props from Quentin Tarantino’s movies that were photographed and turned into art pieces. The PR stunt brought even more attention to Secret Network, as Quentin Tarantino promoted his NFT drop to all major news outlets.
On the development side, Secret Network had just completed its biggest upgrade since the launch of its smart contracts. “Supernova” introduced IBC integration, which would finally connect Secret to all other blockchains on Cosmos. To give more info, Secret could finally access the existing liquidity on Osmosis and Gravity DEX. At the same time, users from other Cosmos chains could benefit from private transactions using the Secret network.
Secret in 2022
The current year has been a powerful one for Secret. With its bridges going live, SCRT Labs have prepared a series of upgrades to enhance the use cases for their privacy-oriented network. With more users coming in, the team laid out the groundwork for Secret 2.0.
One important upgrade is “Shockwave.” As the number of blockchain events grew, the team plans to implement a speed boost to the network which will result in 500-600x increase in speed for events like airdrops and NFT mints. Additionally, smart contract executions will have their transaction per second increased by 3.5x.
On the interoperability side, Secret now has the same contract standard as other major IBC chains. This means Secret contracts will be able to work with contracts on other IBC chains.
To solidify its position as the de facto privacy service on Cosmos, Secret will collaborate with other blockchains to create a system of networks supported by Secret’s smart contracts. As part of the movement, Secret will also collaborate with other privacy-oriented projects to support their liquidity.
Creating a liquidity hub for privacy-oriented projects is crucial for Secret Network and all parties involved. Due to the regulations, centralized exchanges are forced to delist privacy coins, making it more difficult to buy coins like Monero. Secret 2.0 strives to offer privacy coins a decentralized hub where users can interact in a trustless manner with these assets.
Days after the team launched the Shockwave Omega upgrade, bad news have paralyzed the Secret community. Security researchers have discovered a critical vulnerability in Secret’s network.
On October 3, whitehat researchers have notified SCRT Labs of a vulnerability affecting the privacy of data stored on Secret Network. Specifically, the vulnerability could have enabled a hacker to gain access to the master encryption key for the entire blockchain.
Immediately after the news, the development team took action to mitigate the problem. Their first action was to invalidate the access keys, effectively limiting the exposure to the vulnerability. The SCRT Labs team and researchers have worked together to design and build a solution that would prevent vulnerable machines from joining the network.
The solution was quietly deployed on November 2 along with other upgrades. Thanks to the effective action of both teams, no funds have been lost, and now Secret is more resilient than ever. Further limits have been imposed for nodes joining the network as to limit the attack surface of any future vulnerability. The team said that more security measures will be implemented with Secret 2.0.
Secret is in a constant growth cycle, and network participants like us can earn more $SCRT without too much hassle or technical knowledge, right from the comfort of our homes.
Learn how to do that in our Secret Mining & Staking guide, which includes the exact steps and best methods of earning more crypto like $SCRT in 2024 and beyond.