On July 7, privacy-focused blockchain Secret Network posted a governance proposal to shift its native token SCRT from Cosmos to Arbitrum. The team cited security vulnerabilities amplified by AI-driven scanning, low liquidity on Cosmos, and legacy code maintenance issues.
Bridge exploit highlights security concerns
The proposal comes days after a $4.7 million exploit of the Axelar-Secret IBC bridge, which prompted Axelar to disable Secret bridge routes. Secret said the hack did not affect native SCRT, its core privacy protocol, or confidential compute model. But it warned that “the security risk is the part we take most seriously,” adding that “with AI, the cost of attacking stale code is falling across board” as models improve at reading smart contracts and finding weak points.
Liquidity draining from Cosmos
Secret Network acknowledged that Cosmos was the right home in 2020 when appchains, IBC, wallets, and infrastructure had strong momentum. But now, it said, market conditions have changed — liquidity is lower and fewer builders remain. Anoma co-founder Christopher Goes warned in January that Cosmos was under deep stress, with projects like Penumbra, Osmosis, and Noble scaling back or exploring exits. DefiLlama data shows Secret has only about $1.32 million in DeFi TVL, while Cosmos chains total about $2 billion. In contrast, L2Beat lists Arbitrum One as the largest Ethereum scaling network with approximately $17.4 billion in total value secured.
Snapshot rules and market rout
If passed, a one-time snapshot will occur on Sept. 1 to create an ERC-20 SCRT token on Arbitrum. Only native and staked SCRT balances qualify; sSCRT, bridged SCRT, contract-held tokens, and IBC assets are excluded. The team then plans to end official support for the Cosmos-based Secret L1, though validators could keep the old chain alive via third-party efforts. Inflation would drop from 9% to 5%, and the source code would be released under a permissive open-source license.
Market reaction was harsh: CoinGecko shows SCRT trading near $0.041, down about 25% in 24 hours and more than 99% below its 2021 peak. The community vote is pending; rejection would halt the migration.