A Guide to Secret Network (SCRT) – Privacy for the Decentralized Web
Cryptocurrencies have come a long way since their inception more than a decade ago. However, they have yet to make the final leap to mainstream adoption for two reasons. Firstly, some regulators bemoan the lack of transparency in the cryptoverse. Secondly, some investors consider that current blockchains do not offer them enough privacy.
So, how can you fix it and have it both ways? Is there a solution that is highly transparent and offers complete privacy at the same time?
Apparently, yes, and it comes from the Secret Network, a blockchain that allows users to build decentralized and permissionless applications while preserving their privacy. This project has been long in the making, and it is now starting to take shape. So, we took a closer look at its modus operandi to discover if it meets everyone’s expectations.
What is Secret Network?
Secret Network is the first blockchain to provide both transactional and computational privacy. Simply put, it allows users to create and execute secret smart contracts that keep both the inputs and outputs completely hidden.
By operating on the Secret Network, users can count on the full encryption of their data. None of the other nodes on the network can see their details. As a result, they enjoy a new level of anonymity that is not available on any other distributed ledger.
Nevertheless, Secret Network also has a native coin, called SCRT, which is public. But, all the other tokens issued on the network are private. Therefore, the only transactions visible to the other nodes on the network are the ones using SCRT.
This project’s goal is to accelerate mainstream adoption of cryptocurrencies by offering traders extra data protection. This way, corporations that usually handle sensitive information do not have to reveal it when engaging in blockchain-based transactions.
A Brief History of Secret Network
Secret Network was officially launched in February 2020 with the release of its main net. However, the project dates back to 2014, when it was called Enigma, and aspired to be a layer-2 scaling solution for the Ethereum blockchain.
In 2017, Enigma went through some legal trouble after the SEC charged it with securities law violations. The project had just hosted its first ICO, in which it had managed to raise over $45 million. Three years later, it settled the case, and Enigma was fined $500,000. The event was the right time for the project to regroup, change its name to Secret Network, and start again.
Today, Secret Network benefits from the experience and leadership of Tor Bair, a professional options trader and former Head of Growth and Marketing at Enigma. He is a staunch activist for user control over their data and privacy.
How Secret Network Works
Secret Network operates through the Tendermint Byzantine Fault Tolerant consensus mechanism – delegated proof of stake (DPoS). It developed the project with the Cosmos SDK. So, it can process almost 10k transactions per second at a block time of about 6-7 seconds.
The main feature of the network is the Secret Contracts, which are highly encrypted smart contracts. They are coded in Rust and assembled with WASM. Every transaction taking place through a secret contract is completed within Trusted Execution Environments (TEEs).
A TEE is a secure area in a system that protects sensitive data. For instance, smartphones use TEEs to record and store encrypted information.
TEEs are used in many devices, including smartphones and video game consoles, and act like a “black box” wherein it is possible to compute encrypted data.
The Secret Network enables participants to create “secret tokens” using the SNIP-20 standard, which is similar to the ERC-20 standard on Ethereum. However, all secret tokens encrypt financial data automatically.
Secret token holders can prove their holdings with a bit of external help. As participants to the Secret Network, they receive a tool called a Viewing Key. Next, they provide this tool to a third party, who can confirm their claim.
The Secret Network also has a Secret Ethereum Bridge that acts as a two-way wrapping link with the Ethereum blockchain. Like the Ren protocol, users can lock assets on one ledger and mint the corresponding amount of tokens on the other blockchain through this bridge.
Staking on the Secret Network
Users can stake on the Secret Network either as validators or as delegators. For instance, validators can stake a minimum of 1 Secret Network (SCRT). However, the trick is that the network has a limit of 50 validators working simultaneously. So, users need to stake enough to make it in the top-50 and have a marginal chance of success.
The 1 SCRT minimum stake is also available for delegators, who benefit from an un-staking period of a maximum of three weeks. The staking rewards vary on the Secret Network. For example, delegators get roughly 22% per year, and validators get around 30% for the same period.
Incentivization methods are in place for both types of users, as follows:
- Soft Slashing – Cutting 1% of a user’s stake offline for more than 10 minutes.
- Getting in “Jail” – Placing offline validators outside the network and forcing them to rejoin manually.
- Hard Slashing – Cutting 5% of a user’s state if the validator double signs a block.
- Getting “Tombstoned” – Banning validators from the network forever for double signing a block.
Secret Network Governance
The Secret Network allows its users to take part in the platform’s governance. Token holders can vote on proposals regarding the network’s development at a rate of 1 SCRT per vote. More so, they can table a proposal in exchange for 1,000 SCRT, which are locked during the voting process (2 weeks).
A proposal passes when at least 50% of token holders participate in the voting process, and over 33.4% of all SCRT are locked throughout it. Lastly, all the SCRT tokens that receive a veto end up burned.
The Secret Foundation
Approximately 15% of all the staking rewards on the Secret Network go to the Secret Foundation. This non-profit organization manages the Secret Network community and helps with its development. Its founder is none other than Tor Blair, and it is registered in Illinois, U.S.A.
The Secret Foundation implements changes to the network to support several Secret Network committees run by community members. At the time of this writing, there are five Secret Network Committees: Development, Infrastructure, Governance, Education, and Awareness.
What is Secret Network Token (SCRT)?
SCRT is the native token of the Secret Network ledger, where participants can use it for staking or governing purposes.
Contrary to other crypto projects, Secret Network did not organize an ICO for SCRT. Instead, it burned Enigma’s former token, ENG, to mint the new SCRT token. This way, ENG holders could make a swift transition to the new denomination without losing any assets.
The SCRT token also has the same maximum supply of 150 million as its predecessor, ENG. At the time of this writing, there were 69,703,477.00 SCRT in circulation, counting for roughly 40% of the entire amount. Lastly, SCRT was trading at $1.68 and had a market cap of $117,161,244.
SCRT has an inflation rate ranging from 10 to 25% per year, depending on the amount of staked and burned tokens on the Secret Network.
You can buy SCRT at crypto exchanges like Binance, MXC.COM, and Hotbit. Also, since it is an ERC-20 token, you can store it in crypto wallets compatible with Ethereum-based assets, such as Ledger Nano S andMetaMask.
The Bottom Line – A Guide to Secret Network
Secret Network aims to offer what 99.99% of crypto projects fail to deliver: complete privacy and anonymity. Some might argue that the blockchain comes from shady beginnings due to its former legal battle with the SEC under the Enigma moniker. Still, the network seems to have learned from its mistakes and now promises solid development and reliability.
A blockchain with zero public data on its participants could lure in many investors, who so far have avoided sharing sensitive financial information. It could also convince official institutions and regulators to advance the mainstream adoption of blockchain technology and crypto trading.