Key Points
- Secret Network has announced plans to transition its SCRT token from Cosmos to Arbitrum, an Ethereum layer-2 solution.
- The decision follows a $4.7 million security breach on a connected bridge in June 2025.
- Developers warn that artificial intelligence is making legacy code vulnerabilities easier to exploit than ever before.
- Total value locked in Cosmos has plummeted 88% since 2021, while Arbitrum secures $17.4 billion in assets.
- The SCRT token plunged 24% within 24 hours of the migration announcement, now trading around $0.041.
Privacy-focused blockchain Secret Network is planning a significant departure from the Cosmos ecosystem, targeting a migration to Arbitrum, an Ethereum layer-2 scaling solution. The proposal, unveiled on July 7, arrives just weeks after a security breach on a connected bridge resulted in $4.7 million in stolen funds.
According to the development team, security concerns are driving the potential exodus. While Secret Network has called Cosmos home since 2020, the project now views the aging infrastructure as increasingly vulnerable.
“The security risk is the part we take most seriously,” the development team stated. “Old code is becoming dramatically easier to analyze.”
The team highlighted artificial intelligence as an emerging security challenge. Modern AI systems can rapidly scan smart contract code, identify logical flaws, and convert previously hidden vulnerabilities into executable attack vectors with unprecedented speed.
The June security incident targeted the Axelar-Secret IBC bridge, compromising $4.7 million worth of bridged digital assets. While the team emphasized that the core SCRT token and its privacy features remained unaffected, the breach underscored the risks associated with maintaining outdated infrastructure in a shrinking ecosystem.
Declining Fortunes for the Cosmos Network
The Cosmos blockchain network has experienced a dramatic downturn since reaching its zenith in 2021. Currently, the total value locked throughout Cosmos chains stands at approximately $2 billion—an 88% collapse from peak levels. Secret Network itself maintains only $1.3 million in locked assets, based on DefiLlama data.
In stark contrast, Arbitrum commands $17.4 billion in total secured value, establishing it as the dominant Ethereum layer-2 network according to L2Beat metrics.
The development team noted that both developers and liquidity providers have been steadily exiting Cosmos. Infrastructure tools that projects previously relied upon have deteriorated, and multiple prominent projects have already departed the ecosystem.
Secret Network isn’t pioneering this migration path. Stablecoin platform Noble revealed plans to move to Ethereum in January. Privacy-oriented NilChain executed its Ethereum migration in February. Sei Network successfully completed its full transition from Cosmos to Ethereum in June.
Technical Details of the Proposed Transition
Should the governance proposal receive community approval, SCRT Labs intends to capture a snapshot of all SCRT token balances on September 1. This snapshot will serve as the foundation for distributing a new ERC-20 version of SCRT on Arbitrum.
Native SCRT holdings and staked tokens will be eligible for the new token distribution. However, bridged SCRT variants, sSCRT, tokens held in smart contracts, and IBC-based assets will be excluded from the snapshot. Token holders must ensure their assets are in qualifying formats before the deadline.
The project roadmap includes reducing annual token inflation from 9% down to 5% following the migration. SCRT will maintain its role as the governance token on the new platform.
Official maintenance of the Cosmos-based Secret layer-1 blockchain would cease on September 1. However, the original chain could theoretically continue operating if independent validators elect to sustain it without official backing.
The proposal awaits a formal community governance vote. Without majority approval, the migration will be abandoned.
Market reaction to the announcement was decidedly negative. SCRT token value declined approximately 24% in the 24-hour period following the news, settling near $0.041. This valuation represents a staggering 99%+ decrease from the token’s 2021 peak price.
As part of the transition strategy, Secret Network’s development team has committed to releasing the network’s source code under an open-source license.
