Unveiling the Secrets of Secret Network (SCRT)
Secret Network is a privacy blockchain brimming with secrets. It encompasses an ecosystem comprising nodes, smart contracts, decentralized applications, tokenized assets, cross-chain bridges, and even NFTs.
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From the genesis of the digital assets market, have strived to strike the perfect balance between transparency and privacy. Bitcoin, at one point, was deemed the gold standard in this regard — transactions on its public blockchain were visible to everyone while the identities of the wallet owners remained concealed.
However, as time passed, specific projects and businesses emerged that mastered the art of tracking the flow of digital assets. They not only managed to identify the wallets involved, the amounts transferred, and the timing and destination of transfers but also the individuals behind these transactions. Understandably, the majority of the crypto community took umbrage at this scenario. They viewed it as an encroachment on their privacy and an unwarranted invasion into the confidentiality of their financial transfers.
Over more than a decade, starting with Monero, numerous anonymous coins were created. However, most of them caught the attention of regulators due to concerns about Anti-Money Laundering (AML) regulations and illicit transactions. In contrast, the creators of Secret Network seem to have found a potential solution that could satisfy both regulators and users.
What is Secret Network?
Launched in 2020, Secret Network is the inaugural public L1 blockchain with fully private smart contracts. The code is not open-source, and all the smart contract's input and output data are thoroughly encrypted. The level of security is so robust that even transactions executed within secret smart contracts are beyond the reach of nodes in Secret Network.
The only non-confidential aspect of Secret Network is its native coin, SCRT. All SCRT transactions are publicly accessible in the blockchain via blockchain explorers. Nevertheless, secret tokens, issued within Secret Network, default to confidentiality, akin to Monero.
Secret Network empowers anyone to develop decentralized secret applications (dApps) that preserve user confidentiality. This capability presents intriguing opportunities for projects across various sectors, including DeFi, Web3, GameFi, Metaverse, ML, and more.
The developers of Secret Network posit that this blend of transparency and privacy is the key for both the network and the SCRT coin to gain traction and popularity.
The development of Secret Network has seen significant contributions from a host of independent developer groups and organizations, including Enigma, Secret Foundation, Secretnodes.org, Chain of Secrets, and others.
Founders of Secret Network
The Secret Network team came together after gathering experience in another cryptocurrency initiative called Enigma. This venture was established in 2014 by two Massachusetts Institute of Technology graduates, Guy Zyskind and Can Kisagun. Enigma functioned as an Ethereum L2 solution where smart contracts were made confidential.
Before founding the Secret Network, Guy Zyskind spent time at the MIT Media Lab, and he'd previously held the role of CTO at several different firms. When the Secret Network was created, Zyskind penned all of its technical documents and assumed the role of CEO at the newly minted SCRT Labs.
Can Kisagun has an extensive background in business development. Before he became a co-founder of the Secret Network, Kisagun had taken the helm of several companies where he was also a co-founder.
Tor Bair is another key individual within the Secret Network. He earned his Master's in Business Administration at the Massachusetts Institute of Technology, which is where he met Can Kisagun and eventually got involved with Enigma. In addition, Bair has prior experience as a professional options trader.
The Secret Network Blockchain
The blockchain of the Secret Network was constructed using the Cosmos SDK. It utilizes a Delegated Proof-of-Stake (DPoS) consensus algorithm, founded on Byzantine Fault Tolerance, known as Tendermint.
Similar to Cosmos, crafting a block on the Secret Network takes merely 6-7 seconds, and the network's bandwidth surpasses even that — reaching nearly 10,000 transactions per second.
The SCRT Cryptocurrency
SCRT is the native coin of the Secret Network blockchain. It serves various purposes within this ecosystem, including payment for services and fees, user rewards, and network governance.
Currently, approximately 255 million SCRT have been issued so far without a maximum cap. Nearly 204 million coins are presently circulating, with the rest secured. SCRT can be used to generate passive income through staking, leading to many coins being locked in liquidity pools. Stakers can expect an annual return of 25-30% on their holdings.
The inflation rate of SCRT varies between 7% to 15% per annum, depending on the volume of coins circulating within Secret Network. A higher number of circulating coins leads to a lower inflation rate.
Secret Network Components and Ecosystem Assets
Secret smart contracts. These are confidential smart contracts created within the Secret Network. Their code is written in the Rust programming language and compiled using WASM. All transactions of secret contracts are executed inside Trusted Execution Environments (TEE). TEE can be used on various devices, including smartphones and game consoles. Think of TEE as a secure “black box” capable of performing computations on encrypted data.
Tokenized Secret Assets. In Secret Network, they can be issued under the SNIP-20 standard, which is similar to the popular ERC-20 standard. The key distinction is that SNIP-20 tokens are designed to be anonymous by default. This means that they conceal wallet balances, addresses, and transaction details, ensuring privacy on the blockchain. Secret tokenized assets are used in secret smart contracts.
Wrapped Secret Assets. Another interesting feature offered by Secret Network is the Secret Bridges option. It allows asset owners from other ecosystems (Ethereum, Binance Smart Chain, etc.) to create a copy of their assets in the Secret Network, but with added confidentiality (they get the prefix ‘s', for example, sETH). These wrapped assets can then be used in the DeFi market.
Secret NFTs are similar to regular Non-Fungible Tokens, but with an emphasis on privacy. When an NFT is created, private metadata is embedded, allowing for the unlocking of hidden elements that enhance uniqueness and offer a feature of private ownership for individuals. This format has gained significant interest from various celebrities, including Quentin Tarantino, who has created the “Pulp Fiction” collection on the Secret Network. The ecosystem also includes its own NFT marketplace called Stashh, where users can buy, sell, or trade Secret NFTs.
Secret Network grants anonymity to assets derived from other blockchains
Enacting Changes (Secret Governance)
As previously stated, a principal role of SCRT is to facilitate the governance of the network. Any participant, provided they've staked 1000 SCRT, can propose alterations or enhancements to the network, putting their suggestion forward for community-wide voting.
Final Words
The Secret Network team's decision to create the non-anonymous SCRT coin, with its transactions openly accessible on a public blockchain, was both a strategic and innovative move. Concurrently, any actions involving the ecosystem's confidential assets and smart contracts remain undisclosed and entirely private. In terms of regulatory view, the team's approach, focused on the protection of user interests, goes as follows: “While you can see the amount I've invested and withdrawn, what I do with these funds within this network is not your concern.”
For now, this arrangement meets the regulator's approval. Additionally, it enables the ecosystem's assets, smart contracts, and users to retain privacy within the confines of the Secret Network. In essence, this is the standout feature of this project, a unique characteristic that sets it apart from others and garners the attention of such institutional players as DragonFly Capital, Huobi Capital, and Haskey Capital. These, along with a host of other investment funds, keep SCRT within their portfolios.
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