Secret Network Cites AI Risk in Arbitrum Migration Proposal

Secret Network proposed migrating its privacy-focused layer-1 blockchain from the Cosmos ecosystem to Arbitrum, an Ethereum layer-2. The proposal requires a governance vote and includes a one-time snapshot of SCRT balances on Sept. 1 to issue a new ERC-20 SCRT token on Arbitrum.

The project’s team cited rising security risks as the main reason. In a post, the developers wrote: “The security risk is the part we take most seriously. Old code is becoming dramatically easier to analyze … With AI, the cost of attacking stale code is falling across the board.” The proposal points to a June inter-blockchain communication bridge exploit that resulted in about $4.7 million in lost bridged assets; the incident did not affect SCRT.

The proposal also highlighted Arbitrum’s larger developer and liquidity ecosystem. It described Arbitrum as offering “deep liquidity, tooling, wallet and exchange support, and thousands of builders composing with one another,” and said liquidity on Cosmos has thinned as projects have shifted elsewhere.

The team included figures on total value locked. Total value locked across Cosmos is roughly $2 billion, down about 88% from its 2021 peak. Arbitrum leads layer-2 networks with about $17.4 billion in total value secured. Secret Network’s own total value locked on Cosmos is about $1.3 million.

Market reaction to the proposal was immediate: SCRT fell roughly 24% over 24 hours to about $0.041, a decline of more than 99% from its 2021 highs.

Secret Network launched privacy-preserving smart contract capabilities on Cosmos in 2020. The proposal follows several Cosmos-built projects that have shifted toward Ethereum-compatible chains, including NilChain, the Sei Network and Noble.

The proposal now awaits a governance vote by SCRT holders. If approved, the team plans to use the Sept. 1 snapshot to distribute an ERC-20 representation of SCRT on Arbitrum and to support migration into the Ethereum ecosystem.