Privacy-focused layer-1 blockchain Secret Network is proposing to migrate from its longtime home on the Cosmos ecosystem to Ethereum layer-2 Arbitrum, citing security risks from artificial intelligence and other factors. The team behind Secret Network announced the proposal on Tuesday, arguing that the environment has changed significantly since the network launched on Cosmos in 2020.
"The security risk is the part we take most seriously," the team said in a statement. "Old code is becoming dramatically easier to analyze. With AI, the cost of attacking stale code is falling across the board." The team highlighted that the recent Axelar-Secret IBC bridge exploit, which resulted in a loss of $4.7 million in bridged assets, illustrated the growing security risk from aging, under-maintained code. They argued that AI-assisted exploitation is making such risks worse, pointing to advanced AI models like Anthropic's Claude Mythos 5, which have dramatically increased capabilities for discovering and potentially exploiting code vulnerabilities.
The proposal also noted that liquidity on Cosmos has thinned, while builders have "drifted to other ecosystems." In contrast, Arbitrum offers deep liquidity, robust tooling, wallet and exchange support, and thousands of builders composing with one another. The team added that "the tooling you'd want to count on is shakier than it used to be, and a number of projects that once anchored Cosmos have migrated."
Secret Network has been running privacy-preserving smart contracts using its native SCRT token. According to DefiLlama, the total value locked (TVL) in Secret Network on Cosmos is just $1.3 million, a tiny fraction of its peak during the 2021 bull market. The broader Cosmos ecosystem has seen its TVL decline to around $2 billion, down 88% from its peak, while Arbitrum has $17.4 billion in total value secured, making it the leading Ethereum layer-2 network according to L2Beat.
The proposal requires a governance vote by SCRT holders. If approved, the team plans a one-time snapshot of SCRT balances on September 1, which will be used to issue a new ERC-20 SCRT contract on Arbitrum. This token migration will effectively move the entire economic activity of Secret Network to the Arbitrum ecosystem.
SCRT holders did not react well to the news, with the token falling 24% in 24 hours to 4.1 cents, down more than 99% from its 2021 all-time high, according to CoinGecko. The steep decline reflects concerns about the uncertainty of the migration and the network's declining relevance in a competitive privacy blockchain landscape.
Secret Network is not the only blockchain leaving Cosmos. In February, privacy-focused blockchain NilChain, built with the Cosmos SDK, moved to Ethereum. The Sei Network completed a full transition from Cosmos to Ethereum Virtual Machine (EVM) in June, shutting down its native Cosmos transaction layer entirely. Stablecoin blockchain Noble also announced its move from Cosmos to Ethereum in January. These departures highlight a broader trend of projects seeking more active development communities and liquidity on Ethereum and its layer-2 networks.
Secret Network's focus on privacy has been a key differentiator, but the network has struggled to attract and retain users and developers. The Cosmos ecosystem, once a hub for interoperability and scalable blockchain projects, has faced challenges including the collapse of Terra in 2022, which was built on Cosmos. Many projects have since migrated to Ethereum, Solana, or other platforms with more vibrant ecosystems.
The AI exploit risk argument is relatively new in the blockchain space. The Secret team emphasized that "attacks that used to take deep manual effort are getting cheaper as models get better at reading contracts, tracing assumptions, and turning a forgotten edge case into a working exploit." While AI tools can also aid in security audits, the team believes the rapid advancement of AI makes older, unmaintained code increasingly vulnerable. Secret's current codebase, which has been running since 2020, may not have received the continuous upgrades needed to withstand modern AI-driven attack methods.
The June bridge exploit was a stark example. An attacker exploited an "infinite mint" bug in the Axelar-Secret IBC bridge, allowing them to mint an unlimited number of bridged assets. The vulnerability lay in code that had not been updated in years. The team argued that such exploits will become more frequent as AI lowers the cost of discovering vulnerabilities in legacy code.
On Arbitrum, Secret Network expects to leverage the Ethereum ecosystem's mature infrastructure, including wallets like MetaMask, decentralized exchanges like Uniswap, and a wide range of DeFi protocols. The move also opens up access to Arbitrum's growing user base and liquidity pools. The team believes that for SCRT to endure, it needs a new stable home, and the Ethereum ecosystem, specifically Arbitrum, provides that stability.
However, the migration is not automatic. It requires a governance vote, and the community's reaction has been mixed. Some holders are concerned about the loss of the Cosmos native interoperability, while others welcome the move to a more active ecosystem. The token price drop indicates skepticism about the near-term benefits.
In addition to the bridge exploit, Secret Network has faced challenges in maintaining developer interest. Many privacy-focused projects have moved to other chains or built directly on Ethereum using zero-knowledge proofs. Secret Network's unique selling proposition was its ability to execute smart contracts on encrypted data, but competing solutions like Aztec, Zcash (which is also exploring privacy on Ethereum), and various ZK-rollups have emerged.
The proposal's language was direct about the need for change. "Liquidity has thinned," the team stated, noting that builders have drifted to other ecosystems. They also pointed out that the number of projects that once anchored Cosmos have migrated, leaving Secret Network with fewer integration partners and less cross-chain activity. Arbitrum, by contrast, boasts a dense web of applications, bridges, and users that can potentially revitalize Secret Network's utility.
If the governance vote passes, the migration will involve a complete transition of the SCRT token to an ERC-20 on Arbitrum. The native Cosmos chain may continue to operate in a reduced capacity, but the economic center of gravity will shift. This type of migration has precedents, but it is still complex and risky. The team will need to ensure that all bridged assets are properly handled and that the privacy features of Secret Network are preserved on the new chain.
Privacy in blockchain remains a critical yet underdeveloped sector. While Bitcoin and Ethereum offer pseudonymity, true privacy for transactions and smart contracts is still elusive. Secret Network has been one of the few projects to offer programmable privacy, but its adoption has been limited. The move to Arbitrum could either reinvigorate the project or dilute its unique value proposition if not executed carefully.
In the broader context, the blockchain industry continues to evolve with layer-2 scaling solutions, interoperability, and new privacy technologies. Secret Network's decision reflects the pragmatic need to follow liquidity and developer activity, even if it means leaving a familiar ecosystem. The outcome of the governance vote will be closely watched by other projects considering similar moves.
Source:Cointelegraph News