What Is Secret Network (SCRT)?

Secret Network is a privacy-focused blockchain platform that allows developers to build decentralized applications (dApps) with built-in privacy features. What sets Secret Network apart from other blockchains is its use of so-called “secret contracts,” which are essentially smart contracts that utilize encrypted data. This design allows decentralized finance (DeFi) apps to restrict access to sensitive data, such as balances or transaction details, to try to improve user privacy and reduce the risks inherent in fully transparent smart contracts.

In this guide, we will detail everything you need to know about Secret Network and more, exploring what it is, how it works, its tokenomics, and the risks associated with it.

What Is Secret Network (SCRT)?

The Secret Network is a decentralized network of nodes that enable privacy-preserving smart contracts through encrypted inputs, outputs, and on-chain state data. These so-called “secret contracts” execute inside Trusted Execution Environments (TEEs), which are secure areas in computer hardware that isolate sensitive data or code from the larger system. This system allows apps on the network to still process private information without exposing it on the transparent blockchain.

This system makes it possible for developers to build privacy-focused applications, keeping certain data like balances, transaction details, or even app logic private. Even though all of this information can be kept private, the TEEs still ensure that these transactions are still confirmed on-chain, retaining the normal security of the blockchain.

Secret Network has its own native cryptocurrency, SCRT, which helps power the larger ecosystem. SCRT can be used to pay transaction fees, vote on governance proposals, and secure the network via staking. The network’s validators and delegators also earn SCRT tokens for helping to maintain and secure the network.

What makes Secret Network so unique is its customizability. It is far from the first privacy-focused blockchain. However, its design enables programmable privacy, allowing developers to choose what kind of information should be kept private.

History of Secret Network

While Secret Network is a relatively new crypto project in the grand scheme of the market, its origins can be traced back to early cryptography research from over a decade ago. In 2015, the co-founder of Enigma, the research project that would eventually form the foundation of Secret Network, Guy Zyskind, published academic papers that explored how encryption and access controls could be integrated into blockchains to improve privacy.

The Enigma team was able to raise enough funding in 2017 to further develop the idea. After years of development, the team realized that their main goal, to build an optional privacy layer on top of an existing blockchain, wasn’t feasible. They eventually decided to pivot to building their own Layer 1 network with privacy as a main tenet. This new blockchain would become Secret Network.

After another few years of work, the Secret Network layer 1 was finally launched in 2020. The developers used the Cosmos SDK (Software Development Kit) and the Tendermint consensus engine to build and secure the network. We will explore the nitty-gritty details of the network’s mechanics in the next section.

Within a year, the team launched its flagship feature, private smart contracts, on the network with a major mainnet upgrade. Finally, Secret Network became more than a research project and started focusing on attracting developers to build apps on the blockchain.

How Does Secret Network Work?

Secret Network is a privacy-focused Layer 1 blockchain built with the Cosmos SDK and powered by a Proof-of-Stake-based (PoS) Byzantine Fault Tolerant (BFT) consensus mechanism. PoS simply means that it relies on a bunch of validators to process and validate transactions on the network. SCRT stakers can also delegate their tokens to trusted validators, further securing the network.

The BFT consensus mechanism is increasingly common in the crypto industry. Validators vote on blocks of transactions, and their influence is weighed by the amount of tokens they have staked and delegated. Once a consensus is reached, the block is finalized and added to the blockchain.

This system is not very unique, but the way it handles smart contracts is. Smart contracts are snippets of code, stored on a blockchain, that automatically execute a given action when predetermined conditions are met. Most networks store all of the inputs and outputs of smart contracts on the transparent blockchain. Secret Networks’ ‘secret contracts’ allow developers to encrypt their inputs, outputs, and stored state data so that they can keep selected information private.

As we mentioned in a previous section, Secret Network uses Trusted Executable Environments (TEEs) to keep the selected information private. Unique secure areas are built directly into the software used to validate the network, isolating the private code from the rest of the transparent system. This allows extensive privacy without forgoing security because each transaction is still processed on the blockchain. It’s just encrypted.

This information is still accessible to the relevant users through viewing keys, which act like encrypted passwords. Users can use these keys to access the data or even share it with someone else.

What’s the Point of Secret Contracts?

You might be wondering what the point of secret contracts is, especially because most of the crypto industry values transparency so much. Some users might just want to keep their transactions secret for security or basic privacy reasons. However, one of the most important benefits of secret contracts in the DeFi space is to avoid exploits like front-running.

In today’s crypto market, there is an army of Miner Extractable Value (MEV) bots that are constantly watching pending transactions and trying to reorder transactions, insert their own trades, or censor others to turn a profit. The most common kinds of MEV strategies include front-running and sandwich attacks, which can both be devastating for their victims.

Secret contracts can be built to hide the information that these bots use to exploit traders. This likely doesn’t completely eliminate the risks of MEV attacks, but with the right contract, it could be a powerful defense against many of these strategies.

What Are Secret NFTs?

Secret Networks’ special smart contracts don’t just enable basic DeFi utility. They also allow users to make their own privacy-focused non-fungible tokens (NFTs). Similar to its DeFi functionality, creators can pick and choose which elements of an NFT that they want to keep private. These special NFTs are created with the unique SNIP-7212 contract, inspired by the ERC-721 standard.

Secret NFTs have a wide range of potential use cases, such as providing privacy for high-value digital assets to enable confidential transactions on decentralized exchanges. They could also be used to create unlockable content, NFT assets with hidden attributes, or exclusive membership tokens. In the future, Secret NFTs could help create anonymous voting systems or help protect the privacy of sensitive data.

The use of Secret NFTs is not without its risks, however. As these tokens are designed to conceal the identity of their owners, it’s possible that they could be used for illegal or immoral purposes. However, these risks are likely higher with secret fungible tokens.

Secret NFTs are still in the early stages of development, and a limited number of platforms support them. However, if the demand for privacy-focused blockchain applications continues to grow, developers will likely continue to innovate and find new and exciting use cases for the technology.

What Is SCRT Token?

SCRT token is the native cryptocurrency of Secret Network, powering most of its core functions. Some of the main functions of the token include: paying transaction fees, staking SCRT to secure the network, and voting on governance proposals. Validators and delegators earn SCRT tokens by staking them, forming the vital backbone of the network’s security.

It’s important to note that SCRT transactions and balances are not private by default. Developers can make their smart contracts private, but your wallet balance is automatically public.

SCRT has a total supply of 345.5 million tokens, and the vast majority of SCRT is already in circulation. Its inflation rate is beyond the scope of this article, but you can read the full details provided in the project’s documentation.

Benefits and Limitations of Secret Network

Before we conclude, let’s summarize some of the most important benefits and limitations of Secret Network and its token.

Benefits of Secret Network

Using a secret network has many benefits, including increased security, privacy, and anonymity. A secret network is a computer network that uses cryptography to protect communications from being intercepted by third parties. This type of network is often used by businesses and governments to protect sensitive information.

Let us have a look at the most notable advantages of Secret Network:

1. Enhanced privacy: Secret Network’s use of “secret contracts” allows users to keep their data private and secure while benefiting from the network’s decentralized nature.
2. MEV protection: While likely not perfect, Secret Network could help prevent some forms of MEV attacks.
3. Energy efficiency: Secret Network’s PoS consensus mechanism makes it a highly efficient blockchain.
4. Cosmos interoperability: Because it is built with the Cosmos SDK, it is more interoperable with other Cosmos-based blockchains than other networks.

Limitations of Secret Network

Here are the most important limitations that you need to know about:

1. Reliance on trusted hardware: Secret Network’s privacy relies on TEEs, which could theoretically be exploited.
2. Not entirely anonymous: Because it is not private by default, some users may overestimate the privacy of transactions and ownership information.
3. Small ecosystem: Secret Network is still a new, fledgling network with very few functioning apps and tokens.
4. Complexity: The network’s complexity could make it more difficult to use for both users and developers.

What Is the Future of Secret Network?

The Secret Network is a unique blockchain network with one-of-a-kind secret contract technology. However, its use cases are still quite limited, and its complex foundation could make it too difficult for many developers to want to use. Also, it hasn’t yet attracted many large or popular apps to the network and is likely struggling to drive user adoption. Its team has a long way to go to overtake more established privacy blockchains, but if it can convince enough developers and users to start using it, it may have a bright future.

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Ibrahim Ajibade

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I’m a research analyst with experience supporting Web3 startups and financial organizations through data-driven insights and strategic analysis. My goal is to help organizations make smarter decisions by bridging the gap between traditional finance and blockchain innovation.

With a background in Economics, I bring a solid understanding of market dynamics, financial systems, and the broader economic forces shaping the crypto industry. I’m currently pursuing a Master’s degree in Blockchain and Distributed Ledger Technologies at the University of Malta, where I’m expanding my expertise in decentralized systems, smart contracts, and real-world blockchain applications.

I’m especially interested in project evaluation, tokenomics, and ecosystem growth strategies, as these are areas where innovation can drive lasting impact. By combining my academic foundation with hands-on experience, I aim to provide meaningful insights that add value to both the financial and blockchain sectors.