Project Spotlight Special Edition — Secret Network

Published in

Terra

8 min readJul 16, 2021

In our newest issue of Project Spotlight, we’re pleased to introduce a special edition covering one of our valued partner networks and one of the most fascinating application-specific blockchains in the Cosmos ecosystem — Secret Network.

Recently, we jointly announced the Secret Terra Bridge, a bridge to Secret built on Shuttle (separate from IBC) that will enable seamless porting of Terra and Secret assets between the two chains. The bridge is currently on testnet and will unlock cross-chain, programmable privacy for Terra assets on Secret.

So what exactly is Secret Network, and how will the interplay between Terra and Secret’s unique “privacy by default” ecosystems play out over the coming months? Let’s explore.

A Story of Privacy — Secret’s Background

Privacy is an inherent feature of public blockchains, varying in degrees from the most exhaustive privacy-preserving implementations (e.g., Monero, ZCash, etc.) to the inherent pseudonymous privacy afforded to users on networks like Bitcoin. In many ways, privacy is extolled as a fundamental human right that blockchains are capable of empowering, serving as one of the cardinal dogmas of many ardent supporters of cryptocurrencies.

Cryptocurrencies induced a “Golden Era” of privacy-preserving technological exploration. Incredible developments like zero-knowledge proofs and the CryptoNote technology suite emerged from the fusion of Internet-native social coordination, academic endeavors, and rapid prototyping. Often guided by anonymous founders and developers, the privacy movement in crypto tilts directly at the surveillance state, augmenting censorship resistance by obfuscating the trail of economic transactions on public blockchains.

From Bytecoin to Monero, Grin, and ZCash, battle-tested and extraordinarily powerful privacy technologies are commonplace within crypto today. Privacy innovation with crypto has even stoked the resurgence of once deprecated ideas, such as mixnets and their derivatives.

However, one glaring area remains for anonymity within crypto to penetrate — smart contracts platforms.

Slowly, privacy features have trickled into smart contracts networks like Ethereum with independent solutions like Tornado Cash. Still, privacy by default on a public smart contracts-enabled platform was outside the scope of most endeavors.

That is, until Secret Network.

Originating from the Enigma whitepapers developed by Enigma MPC Co-Founder and CEO Guy Zyskind while at MIT, Secret Network was the first permissionless smart contracts blockchain to enable programmable privacy by default and is still the only one with such functionality — meaning that advanced privacy primitives are baked directly into the protocol’s layer one.

“Since privacy-preserving ‘Secret’ smart contracts launched on mainnet in September 2020, there has been an incredible growth of users and developers supporting the network, as well as new applications,” says Tor Bair, Founder of Secret Foundation. “Key entities in Secret Network include Enigma MPC and Secret Foundation, which have played an important role in bridging Secret Network to other DeFi ecosystems and blockchains such as Ethereum and Binance Smart Chain.”

In the case of Secret Network, the cryptographic primitives preserving privacy are a hybrid of Trusted Execution Environments (TEEs) and key exchange protocols, enabling nodes in the network to perform computations over encrypted data.

CosmWasm-based smart contracts and functions designated within these contracts are executed inside of the secure enclaves, which allows many new kinds of more secure and more usable applications to be built.

As a result of these additional privacy protections, Secret severs the connection between transacting parties on a public blockchain, where typically all economic data is exposed. Token transaction details, including amounts and interacting addresses, are obfuscated. According to Secret’s Graypaper:

“Secret Contracts enable encrypted input, state, and output. Inputs for Secret Contracts such as block height, time, chain id, sender, address, sent funds, and contract hash are not encrypted. The primary input component that is encrypted is messages created by clients. The contract state (the internal persisted database) of a Secret Contract is always encrypted and only ever known by the contract itself inside the TEE. Outputs that are encrypted are only known to the transaction sender and to the contract itself.”

Applied to a smart contracts-enabled network like Secret, this means that applications on the network can utilize encrypted data on the network without ever exposing the data itself — even to network nodes. Via a series of constant length messaging padding and “viewing keys,” Secret allows queries from other application-specific chains in Cosmos to verify data integrity without sacrificing privacy.

Default privacy of smart contracts is known as “computational privacy,” which supersedes the “transactional privacy” of most privacy-oriented chains within crypto. Its power is intensified by Secret’s interoperable nature, exporting privacy across an inter-chain ecosystem as DeFi’s hub of anonymity.

But programmable privacy also carries another feature — optionality.

“Programmable privacy means being able to use private data when required while also allowing transparency as needed,” continued Bair. “This enables decentralized applications to utilize encrypted data, solving the privacy problems created by public-by-default blockchains that expose all data in the network.”

Exporting Secret’s privacy capabilities is already underway. As an application-specific blockchain built on the Cosmos SDK with Tendermint consensus, Secret is currently working to add IBC-enabled functionality natively. Not to mention, Secret already has live bridges to both Ethereum and Binance Smart Chain, with several more custom bridges in the works, including yours truly, Terra.

“Terra’s vision of bridging DeFi tools and tokens to everyday users is inspirational,” says Bair. “Secret Network also has a vision for global adoption of DeFi and other applications on Web 3. Within this story of global adoption, Secret Network is bringing privacy as the final missing attribute.”

Secret Network meets Terra’s booming DeFi ecosystem, targeting mainstream adoption.

Welcome to privacy for everybody.

Secret x Terra — A Brighter Privacy Future for an Inter-Chain World

Privacy by default, optional transparency when needed, interoperability as a first principle. So what does this all mean for the Terra community and the broader Cosmos ecosystem?

Secret serves as a privacy-enabled hub for assets, data, and transactions across Cosmos and beyond. Applied to Terra, this unlocks a spectrum of possibilities for Terra assets and cross-chain user interactions with apps on Secret Network, such as SecretSwap.

“The Secret Network community believes there is an incredible amount of potential on the horizon with bridging to the Terra ecosystem,” continues Bair. “TerraUSD brings price-stable and growth-driven stablecoins into Secret Network DeFi — empowering Secret Apps (such as SecretSwap) to have rapid liquidity access to a store of value in the form of Terra stablecoins.”

With the implementation of the Secret Terra bridge, users will be able to convert Terra assets into their privacy-preserving Secret Token equivalents while also gaining access to the Secret DeFi ecosystem. The Secret Token equivalents are native Terra assets wrapped in the privacy guarantees of Secret’s mechanism design.

Once the bridge is live, Terra and Secret users simply navigate to Terra Bridge, select the assets they’d like to swap, confirm the transaction, and boom — private UST, MIR, LUNA, etc. on Secret and inflows of Secret asset liquidity into Terra’s DeFi ecosystem.

For Secret users, they’re introduced to the myriad yield farming opportunities in Terra’s economy, mutually benefiting both ecosystems as assets seamlessly swap between chains. Conversely, Terra users can experience Secret UST — the first truly decentralized, algorithmic, private USD-pegged stablecoin in DeFi. It’s uncensorable, untraceable, infinitely scalable cash for the Internet.

We anticipate the demand for Secret UST to be significant over the long run, inducing further seigniorage and expansion of the UST money supply. More derivatives of UST traversing around the Cosmos significantly diversifies UST’s liquidity surface, already aptly demonstrated by yield-bearing aUST (AnchorUST) comprising ~25% of UST’s outstanding supply.

Eventually, Secret UST may comprise a significant portion of UST’s outstanding liabilities. As Secret’s DeFi ecosystem progresses to unleash dark pools, NFTs with private metadata, front-running resistant AMMs, private auctions, and whatever else is possible within a cross-chain DeFi ecosystem where privacy is a default feature, Secret UST’s supply should increase accordingly as a stable, private currency medium within Cosmos.

Outside of Secret UST, let’s examine a more granular example of the potential of Terra assets on Secret using Mirror, everyone’s favorite synthetic assets protocol. Once the Secret Terra bridge is live, SecretSwap, Secret’s front-running resistant, cross-chain, privacy-enabled AMM, can integrate mAssets from Mirror.

Enter Alice.

Alice is an avid Terra user excited about Secret Network and wants to explore the various yield farming and other DeFi opportunities available on Secret. She holds numerous mAssets on Mirror, including mTSLA.

Alice goes to Terra Bridge, bridges mTSLA from her Terra Station wallet to her new Keplr wallet on Secret Network via the intuitive Terra Bridge interface. The bridging process converts Alice’s mTSLA into the Secret Token equivalent (e.g., Secret mTSLA), providing wrapped token privacy for all of her mTSLA transactions.

Alice can now trade her mTSLA on SecretSwap for other secret tokens, perhaps even Secret UST, or she can become a liquidity provider on SecretSwap with her Secret mTSLA. In the future, Alice may be able to purchase Secret NFT art with her mTSLA using Secret Auctions.

Imagine having privacy-enabled liquidity for an mAsset denominated in an sNFT.

Or, perhaps Alice would like to Play Secret Heroes and purchase NFT heroes to battle with her mTSLA? While some of these ideas are in their nascent stages, the potential design space and interplay of assets is enormous. It’s just a glimpse into what the future of the Secret Terra Bridge holds.

The best part? Every Secret app interaction by Terra users is fully encrypted, extending privacy-by-default to the #LUNAtic community via a few clicks.

Launching The Secret Terra Bridge

As previously mentioned, the Secret Terra Bridge is currently live on testnet. Testing of the bridge has made excellent progress so far.

The internal testnet of holodeck (Secret testnet) has been successfully connected to tequila-0004 (Terra testnet) for approximately 2 weeks with good stability and no major connectivity issues.

Due to Terra’s CosmWasm upgrade in mid-July (i.e., Columbus-5), the teams are preparing to migrate from the tequila testnet to the new Bombay network post-CosmWasm upgrade. The public testnet of holodeck connected to Bombay is ready, and after this upgrade, the teams will be able to fully deploy the Secret Terra Bridge to the Columbus-05 Bombay testnet.

Stay tuned for more details about the official mainnet launch of the Secret Terra Bridge!

For more info about Secret Network, be sure to check out their socials below:

Website — https://scrt.network/

Twitter — https://twitter.com/SecretNetwork

Discord — https://discord.com/invite/SJK32GY

Telegram — https://t.me/SCRTcommunity

YouTube — https://www.youtube.com/channel/UCZPqj7h7mzjwuSfw_UWxQPw

GitHub — https://github.com/SecretFoundation/SecretWebsite

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Application form to build on Terra — Terraform Capital:

https://airtable.com/shrN4ydO8nZcMa0ku

Terra community pool + Agora research forum: