Making Native Privacy the Web3 Standard — — Secret Network Builds a data platform with both permissionless and privacy-preserving
The metadata of encrypted smart contracts unlocks the DeFi protocol and the entire value layer previously inaccessible to users, and the privacy integrated into the DeFi product protects user anonymity, location and value transfer. MEV (Miner Extractable Value) bots are ‘wiping out’ days or user enthusiasm on dApps on a daily basis on various exchange platforms.
For example, some publicly visible collateralized positions have caused larger market makers to take advantage of price movements in a favorable manner causing mass liquidation events, and some NFT market grabs have damaged the reputation of multiple platforms.
Then again, the lack of trading privacy has exposed various DeFi entities and led to heavily monitored asset transfers, which limits the possibility of entities taking early positions without being detected by the market.
Shade Protocol, a connection privacy-preserving DeFi application built on the Secret Network, aims to fill this gap and fully protect the ‘secrets’ of the market.
I’m Apple from CryptoJ and I’m honored to be the moderator for this session. Tonight, CryptoJ will explore the next generation of privacy solutions with Secret Network, the privacy public chain, and Shade Protocol, the privacy DeFi protection protocol within its ecosystem.
To learn more about Secret Network & Shade Protocol and how privacy protection makes sense, on November 4, 2021, CryptoJ invited Carter L. Woetzel, community lead at Secret Foundation and lead researcher at Shade Protocol, a Secret Network ecosystem project, to talk about how privacy protection works. On November 4, 2021, CryptoJ invited Carter L. Woetzel, head of the Secret Foundation community and lead researcher of the Secret Network ecosystem project Shade Protocol, to join us for an in-depth discussion of privacy topics in this issue of AMA’s “Secret Network — The Data Privacy Platform of Web3”.
Question1:First of all, let’s welcome Carter L. Woetze to join CryptoJ’s community for the first time. can you tell us a little bit about Secret Network its background and vision? Can you summarize the main features of the Secret Network ?
Answer：Secret Network was previously a layer 2 privacy solution built on Ethereum known as “Enigma” in early 2017. Due to scalability issues on Ethereum, the tech stack migrated to being a layer one solution built using the Cosmos SDK, leveraging proof-of-stake (PoS) using Tendermint’s Byzantine fault-tolerant consensus algorithm.
Secret Network has the following features:
- Data privacy for all dApps
- Privacy for transactions
- Permit key architecture to allow users to locally decrypt their own transactions and application data — path to compliance and auditability
- Built with the Cosmos SDK
- Proof of Stake consensus
- 6 second block times
The vision for Secret Network is simple: bring privacy to every blockchain application. DeFi, gaming, DAOs, healthcare, insurance, merchants, payment systems, and others. All of these need privacy to truly succeed in the long run.
Question2: When there’s a new project, many people would want to know more about the team members. Now let’s invite Carter L. Woetze to do a brief introduction to your team members, including some interesting stories behind the project.
Answer：
One of the core development teams behind Secret Network is SCRT Labs (formerly Enigma), a software development company originating from the prestigious Massachusetts Institute of Technology (MIT). In fact, many of the core contributors today knew each other from as early as 2015 — making Secret Network one of the oldest projects and teams in the blockchain industry, despite the rebranding and renaming of the network. Other key contributors are Tor Bair — CEO of the Secret Foundation — he has led network growth from every conceivable angle. Media, organic community growth, “Secret Agents”, in-person events, product integrations and collaborations. I myself have only been deeply involved in the project since summer of 2020, I am the author of the Secret Network graypaper (courtesy of Enigma and all of their assistance with this endeavour). Currently, I am focused on marketing and community management, with an emphasis on content creation. Odds are if you have read a blog post on the main Secret Network website, that was me. Additionally, I am the lead researcher and economist of Shade Protocol — an array of connected privacy-preserving DeFi dApps. The first of which is ‘Silk’, a privacy-preserving algorithmic stablecoin built on Secret Network.
Question3: Secret Network has always been attracting extensive market attention. Could you share with us the funding process and partnership at present?What milestones have been achieved so far?
Answer：
Secret Network has over $140,000,000 in TVL across its two major DEXs SiennaSwap and SecretSwap.
Known investment partners in Secret Network are Arrington Capital, Blocktower Capital, Fenbushi, Hashed, Outlier Ventures, Skynet Trading, and Spartan Group.
Recently, SiennaSwap finished an $11,200,000 private raise with other partners as well. The greatest milestone of Secret Network is the growth of its application layer: there are over 10 applications live on the network, with over 10 grants funded from an ecosystem fund that is currently worth ~$180,000,000.
Additionally, there are over 20 applications currently in development, some of which have private raises from institutional investors that have yet to be announced.
Question4:Can you tell us about why you thought Secret Network needed to be built and what problem it solves?
Answer：
The vision of Secret Network is simple: blockchain without data privacy is inherently limited. You wouldn’t use a decentralized uber application if your location was publicly visible on-chain.
You wouldn’t buy an ice cream cone from a vendor with crypto if that meant you doxed not only your wallet balance, but every single transaction you have made since the beginning of time. You wouldn’t use a healthcare application integrated into blockchain if all of those records were publicly visible. We believe that privacy is key to unlocking the full value of a decentralized future.
Question 5:Back to privacy, Why did Secret Network choose the privacy section? In your opinion, what is the meaning of privacy protection and privacy calculation for the blockchain industry?Why privacy?
Answer：Currently in DeFi, front-running costs users $1bil+. Secret Network due to the privacy on the application is completely front-running resistant.
On Ethereum and other public blockchains, liquidity providing, investments, and trading strategies are being copied on-chain due to the transparency, making it difficult for large and small investors to have unique trading strategies. Merchants cannot accept truly peer-to-peer transactions without endangering the privacy of the buyer. Simply put, privacy is utility.
Not only that, we believe privacy is a human right. Web3 has less privacy right now than Web2. Fortunately, Secret Network is able to effectively meet the privacy needs as the data privacy platform of Web3.
Question 6:Why did Secret Network choose to build own public chain?Is Secret Network interoperable and if so on which chains?
Answer：Secret Network chose to build its own public chain such that we could specifically add privacy to the application layer. Using the Cosmos SDK, interoperability becomes easy to incorporate with IBC. Secret Network has already established bridges to the following chains:
- Monero (mainnet)
- Ethereum (mainnet)
- Binance Smart Chain (mainnet)
- Terra/Luna (testnet)
- Polkadot (testnet)
- Bitcoin (testnet)
Question 7：Talking about privacy, people can normally be reminded of Nucypher, tornado、Sienna , etc. So what makes Secret Network more competitive?
Answer：Sienna is actually built on top of Secret Network, just to be clear.
Compared to other layer-1s, Secret Network has already had programmable privacy live since September of 2020. Secret Network is more than just a transaction mixer.
Secret Network is what you get if you combined Ethereum + Monero + Cosmos. Using TEEs + encryption sharing schema, Secret Network leverages hardware level encryption which is much more scalable and faster than ZK-SNARKS or other alternative solutions.
The theoretical TPS cap on Secret Network is ~1,000 transactions per second one the newest generation of TEEs are incorporated in 2024. Additionally, Secret Network will also be aiming to incorporate unique roll-up solutions if need be.
Question 8：Secret Network has established many applications in your ecosystem, such as Shade Protocol and Sienna.network. Could you introduce the development status of dapps in your ecosystem?
Answer：
Shade Protocol is actively in development and is currently undergoing a private raise with key partners. Snapshots for the $SHD airdrop are starting November 7th, and will go all the way to December 13th. So be sure to stake your SCRT, Luna, and $Atom to qualify for any airdrop. Shade Protocol and Silk (the stablecoin of Shade Protocol) is currently on testnet and will be integrating with SecretSwap and SiennaSwap at launch. Stay tuned for more product integrations from Shade Protocol. You can expect Shade Protocol to be one of the most significant Secret Network product launches to date, targeting the start of Q1 for mainnet launch.
SiennaSwap is actively working on creation of a lending product (which Silk will be integrated into). SiennaSwap successfully launched in October, and is now rapidly growing its liquidity. Start trading today!
To keep things simple, here is a list of some of the dApps:
SecretSwap.io -> DEX
Sienna.network -> DEX, soon to have lending
Auctions.scrt.network -> Sealed bid OTC marketplace
Stashh.co -> privacy-preserving NFT marketplace
Altermai.live -> encrypted communications (such as email) using Secret Network
Fardels.network -> encrypted social media and novel sharing
Bridge.scrt.network -> bridge to ethereum, BSC, IBC empowered chains, etc.
Scrtgarden.com -> a place to create, manage, and explore tokens on Secret Network
Secretheroes.es -> first ever provably privacy-preserving on-chain NFT battling
Shadeprotocol.io -> privacy-preserving algorithmic stablecoin
Question 9：Secret announced on Twitter that ：“Secret partners with opensea on the launch and auction of a one-of-a-kind Secret NFT collection in November,” can you tell us more about it?
Answer：Secret Network announced a partnership with Quentin Tarantino for a series of NFTs attached to the iconic film “Pulp Fiction”. The NFTs will leverage the privacy-preserving features of Secret Network such that the NFT data and gallery ownership will be anonymous. This is the first of many tier-1 hollywood artists, musicians, and iconic figures to issues NFTs on Secret NEtwork. Opensea will be used for the auction and purchase of the NFTs, but Secret Network is where the functionality of the Secret NFTs will be located.
Question 10：Secret Network has announced that the development company behind it, Enigma, is rebranding into SCRT Labs, can you share with us what this change means for the project?
Answer：
The recent months have seen tremendous success for Secret Network, with exponential growth in our application layer and on-chain usage. Enigma remained a strong brand for crypto OGs and privacy enthusiasts, but with the community around Secret growing in orders of magnitude, it’s become clear to us that having an old, static brand like Enigma live alongside Secret’s explosive potential is confusing — and not very effective.
The primary goal with the rebrand is to achieve this level of simplicity and establish a clear link between ongoing development efforts and SCRT Labs unwavering support of Secret Network. We believe this would help newcomers to the network to better understand our position and motivation, and it will also make internal functions like business development and marketing much more straightforward and seamless.
There are other reasons for the rebranding. Enigma, while a great name (at least in my opinion — I chose it, after all), is too generic for our purposes. When the network’s brand was associated with it, it was an easier call to keep it, but without that backing, it simply did not make sense anymore.
Another major reason that not many people are aware of is that Enigma (the development company) is not where the real development occurs, and its operations have been reduced to a minimum. Since about 2019, our core development and product team are incorporated under a different company called Gamma. Therefore, using the Enigma brand has become a historical relic, and one that does not hold much future value.
Finally, many people still associate Enigma with $ENG — a defunct token that we do not support nor invest development effort in anymore. It rightfully adds to the confusion when we try to frame ourselves as the driving force and the founding core development team behind Secret Network. We are all team $SCRT, and that should be apparent to anyone.
Question11：For value capturing, what is the tokenomics of Secret Network？How do you incentivize the users to hold the tokens in the long run? What are the application scenarios of the token ?
Answer：The native gas token of Secret Network is called “SCRT”. SCRT is used for transactions, staking, and governance. Because Secret Network uses the PoS model, staking is a key component of network security and consensus. Tokenomics of Secret Network are the following:
- ~102M SCRT staked -> ~26% APR on staking SCRT
- ~95M SCRT circulating
- 15% inflation
- ~1M SCRT in the community pool (~$10,000,000)
- ~20M SCRT in the ecosystem pool (~$180,000,000)
SCRT stakers earn ~26% APR on staking annually. Additionally, SCRT is the required gas token of Secret Network for executing transactions. Finally, SCRT stakers also receive airdrops for native Secret Network launches such as SEFI back in March of 2021, as well as the upcoming Shade Protocol airdrop. Finally, SCRT stakers get to directly participate in governance — empowering stakers to have a voice in the future of Secret Network as a protocol.
Question12：What are you currently working on and can you describe your future roadmap?
Answer: The most exciting upgrade is Secret Network will be IBC enabled — allowing Secret Network to talk to other chains such as Terra/Luna, Atom, Osmosis, Gravity Dex, Juno, and more! With cross-chain contract calls, other blockchains will be able to use Secret Network privacy-preserving features with their applications. We are just beginning to explore the possibilities of what this could mean.
Additionally, stay tuned for the launch of stashh.co — an NFT marketplace featuring privacy-preserving ownership, access controls, and content!
