Secret^3: Community Continuance of Secret Network L1

[snf_admin]

Summary

This proposal is a concrete path to continue the Secret L1 under new stewardship, with economics that can actually fund development, infrastructure, and remediation — without migrating away from the existing chain, and without leaving any class of holders behind. That includes holders whose SCRT is locked in contracts, such as staked SCRT via Shade.

The priority of this plan is continuity, remediation, and stakeholder alignment so the network has a viable future. The goal is to create workable long-term economics so that infrastructure providers (validators and relayers), builders, and a new core team have real skin in the game and the resources required to keep the chain alive.

In short:

• The chain continues on the same network. There is no fork, and no migration is supported by the community.

• Supply is restructured through a dilution mint so the network can be economically viable.

• A new entity, which I would lead, provides coordination and long-term stewardship, funded by an allocation sized so the economics actually work.

• A new core development team, validators, relayers, builders, and hack victims all receive defined allocations aligned with community stakeholders, so incentives point the same direction.

• Every existing SCRT holder stays on the same chain. No one is carved out.

1. . Vision

For the past couple of years, we saw opportunities on Secret Network, but lacked the autonomy to take it in a new direction. With the changes to the network, new builders have stepped up, and with new builders comes new energy and new ideas. This is why I’m confident about our future, and why this section exists.

That confidence doesn’t rest on a single project or decision. It rests on a wave of interest from builders old and new - not weekend hackathon projects, but proven teams with live or nearly-live products.

Immediate term

Secret AI/VM continues, and gets stronger. It will build on our existing partner relationships and the Dstack technology stack, now under the Linux Foundation - which means we tap into a collaborative project with dozens of talented contributors instead of depending on an isolated pod of builders, AND we have the opportunity to contribute to that project collaboratively.

CONTINUING: SilentSwap is a successful product built on Secret that deserved better support than it got from us in the past. Now we can give it that support, helping the team hit their technical goals and grow on the chain they chose.

Community-built projects are already in the pipeline — scoped and architected by our own developer community. Those builders will speak for themselves when they’re ready, and there are strong candidates among them.

IN TALKS: A confidential wellness platform is preparing to build its chain layer on Secret. The team’s apps are already live (UmmuHub, Engne), it has raised funding, holds partnerships with 30 of the top clinics in the UK and Europe, and brings 80,000 epigenetic records to train its algorithms — exactly the kind of sensitive data that needs confidential compute. The founder has been invited to share his vision and roadmap with this community.

CONFIRMED: The Builder Program returns. It brought in a wave of new projects last year, and this time we can back it with the technical commitment those teams actually need.

Morpheus: the partnership is well advanced, and we are in talks to support them on the existing Secret chain.

IN TALKS: TEE and privacy collaborations. Confidential compute is bigger than any one chain, and Secret is strongest in the middle of it. Through the Ecosystem Fund, we’ll back TEE and privacy projects from partners and third parties who want to collaborate with Secret — real collaborations, where their work and ours connect, and more of the field’s proven teams end up building alongside us.

More to come: There are other earlier stage projects in the pipeline that are still forming, and you will see them pop up over the coming weeks as we follow through with making our transition plan real.

Longer term

Next-generation Secret is already in active planning. It builds on prior research and continues with partners and builders. That work will be delivered when it is ready.

2. Refreshed Economics

To make continuance economically viable, this proposal refreshes the network’s token economics through a one-time mint, updated inflation parameters, and clear vesting schedules. Existing SCRT stays in place. New tokens are minted such that the existing supply becomes approximately 25.1% of the post-mint total (to be finalized with community input).

Worked example:

Current / existing supply (E) = 361,966,533 SCRT → ~25.1% of post-mint total

Post-mint total supply (T) ≈ 1,441M SCRT

Mint (new allocations) (M) ≈ 1,079M SCRT → ~74.9% of post-mint total

Every existing SCRT — including staked SCRT and other contract-locked positions — keeps the same absolute balance on the continuing chain. Remediation and stakeholder alignment are funded from the mint, not by excluding classes of holders.

Inflation

Ongoing inflation is set at 5%. This rate is high enough to support network security and validator participation, while remaining well below the high-double-digit levels that have drawn sustained criticism across the Cosmos ecosystem. It is intended as a stable, workable baseline that can be revisited later as real fee and revenue mechanisms mature.

Foundation tax is set at 0%. There is no protocol-level tax flowing to the Foundation under this proposal. A tax may be proposed in the future for community vote.

A portion of new allocations is liquid immediately so the network is not operationally frozen — about 308M SCRT (~21.4% of the post-mint total) at execution, including the fully liquid Ecosystem Fund and Builder & Relayer Support allocations and the 30% upfront remediation tranche. Vested coins may be staked, ensuring stakeholders remain empowered in governance while their tokens unlock over time.

Transparency and custody. The Foundation will publish payout reports on validator distributions and core development distributions, and will publish annual reports on all expenditures. The largest treasury funds will be held in secure wallets, with smaller operating amounts held in hardware wallets.

Remediation. There will be no backtracking on remediation. Third parties are involved, and details beyond what is shown here will be publicized when all parties are ready. We firmly commit to the numbers for hack victims, and we are in touch with the required parties.

Validator Program (72M — 5.0%)

The validator allocation works differently from the other buckets, because it is earned by operating the network.

10% up front. Validators who intend to continue in the active set at execution receive their share immediately if they have given us a new Secret wallet address before the proposal goes on chain. Send me a dm on telegram if you want to participate in this. After the proposal goes on chain, Validators in the active set will be able to provide their address after the mint for a manual allocation process.

The rest is earned quarterly over 5 years. The remaining 90% is paid in equal quarterly distributions to validators who remain in active operation — vest-while-validating. This will be handled entirely by the Foundation, transparently: the program address will be published, and any validator in the active set can ask us questions about it and share any response they get. Run the chain for the full five years, and every coin of your allocation — and the rewards it earned along the way — is yours.

Commission capped at 20%. This program is only valid for validators who maintain a commission no higher than 20%. Going above the cap means leaving the program; the seat opens as described below.

Delegations from day one. Until a validator’s allocation is fully paid out, the Foundation will delegate to them at least the amount of their remaining undistributed balance as long as they are active. That is not the ceiling - there are likely to be additional delegations from the Foundation over time. Commission and voting power start immediately, ahead of the release of the tokens themselves, and rewards generated by a validator’s undistributed balance flow to that validator with each quarterly payment.

Seats, not names. If a validator leaves, their remaining schedule does not fall back to Foundation discretion. A new validator may take over the seat and resume the schedule from where it stopped, under a process defined in the final proposal.

Never repurposed. This allocation exists to empower validators. It will not be redirected to anything else. A vacant seat’s funds wait for a validator.

3. What This Proposal Is Asking

• Continuance of the Secret L1 under community stewardship.

• Establishment of a new entity, which I would lead, with an allocation sized so the network’s economics are viable.

• A dilution mint that funds the Foundation, core development, advisors, validators, relayers, builders, and remediation — with all SCRT holders included, staked SCRT holders among them.

• Clear-eyed acceptance of large-scale dilution as the cost of a viable, aligned network. The working figure in this draft is 74.9%; the final figure will be set after this feedback round.

4. Governance and Adoption Path

Success is not automatic. At minimum, this path needs:

Multisig / signer support. A critical mass of chain- and upgrade-relevant signers must agree — discussed as on the order of about 7 of roughly 16 signers, with exact thresholds to be confirmed against current governance and upgrade procedures.

Community legitimacy. Visible buy-in: social discussion, validator and builder signaling, and governance voting that shows real support — not just a thin formal majority.

Credible execution. The new entity will state what it can deliver — roadmap, staffing, use of allocation proceeds, remediation process design — so that the eventual vote is about a real plan, not a slogan.

Parameter finalization. Bucket weights, vesting, immediate liquidity, and remediation eligibility rules will be set after this feedback round.

Timeline. Voting is targeted to start on August 5, 2026.

5. Risks

These are the material risks. Read this section assuming any of them can materialize.

5.1 Concentrated stake and governance capture

Large historical holders still have stakes and may no longer be aligned with the network and community. Under this proposal they would retain a minority stake — less than all new allocations combined. We address this to the extent we believe makes the economics and alignment for continuity possible.

Even a well-designed community proposal can be delayed or defeated by concentrated voting power — behavior already seen on prior proposals. Passing upgrades or parameter changes may require genuine alignment from large holders, or social and operator-level coordination beyond a simple token vote.

Mitigation is partial, not guaranteed: transparent communication, signer and operator coordination, public signaling, and structuring the proposal so that continuing the chain stays attractive to validators and builders even under political friction.

5.2 The community may reject the necessary economics

The economics this plan requires — a real allocation for the new entity, allocations to validators, relayers, and builders, and meaningful dilution of existing supply — may be unacceptable to a large part of the community, even among people who want Secret to survive in the abstract.

If that happens, the consequence is simple: I don’t currently see a softer alternative that both keeps the L1 alive with a real team and avoids hard tradeoffs on supply and control. If this thread surfaces one, I want to hear it.

5.3 Failure to convene the full stakeholder set (the existential risk)

This plan only works if enough of the people who actually run and build the network choose to participate: multisig and upgrade signers, validators, relayers, builders and application teams, and a core development entity funded through the Foundation.

If that coalition does not form — if signers won’t sign, validators won’t run, builders won’t build, and a development team won’t stay or form — then this proposal fails. In that failure mode there is no credible plan that carries the full set of existing participants into a single viable venture, there may be no remaining development team with the mandate and resources to maintain the L1, and the network risks fragmentation, abandonment, or a slow decline — no matter how carefully the design is written.

That is the central existential risk: token design cannot substitute for human and operational coordination. Without the people who secure, build, and maintain the chain, there is no version of this that works.

5.4 Exchange support and listing risk

There are no promises or guarantees with exchanges. Listing and ongoing support decisions remain outside the control of any community proposal.

5.5 Technical risk from the state of the chain

Deferred maintenance does not disappear when stewardship changes hands. The chain has not been well maintained for some time, and the abandonment is abrupt: whoever takes this on inherits the accumulated technical debt along with the codebase. The risk is not only that the work is hard; it is that it has to be done on a timeline that allows the network to survive.

We have several experienced technical people on the details, some of whom have worked deeply on this chain before. That improves the odds; it does not remove the risk, and no one can make guarantees. This proposal offers zero guarantees outside of best effort given the situation.

5.6 Other material risks, briefly

• Remediation shortfall: the allocation improves the odds for victims; it does not guarantee full recovery.

• Market and liquidity shock: large mints and re-allocations can create volatility and confusion; liquid portions must be sized carefully.

• Legal / entity risk: forming and capitalizing the new entity introduces jurisdictional, compliance, and operational risk.

• Execution risk: delivery depends on the new entity shipping software, parameters, and processes after a successful vote.

6. Projected Operating Expenses

7. Closing

Without continuity, holders could keep 100% of something abandoned. This plan is our good-faith best effort to give people a stake in something run by people dedicated to moving forward and building into the future.

The same chain - carrying every holder forward, staked SCRT (stkd-SCRT) and sSCRT positions included, and a defined remediation path for hack victims - with a new entity and core team that have the resources to do the job properly, and economics sized so real infrastructure and real development can continue.

This only succeeds if the community, especially signers, validators, relayers, and builders, chooses to make it real.

• Lisa

[zenopie]

Fixed nominal inflation > fixed percentage inflation (monero vs atom)

Changes inflation schedule from exponential to linear.

[crypto_mentions]

6. Projected Operating Expenses

I’m confused that the amount allocated to the Foundation and core development by the vesting schedule doesn’t seem to cover annual operating expenses. Per the vesting legend, Foundation and Core Development each get 10% liquid at execution, then a 6-month cliff, then the remaining 90% vests linearly over 5 years. That means by month 12, only about 19% of each bucket has unlocked — roughly 56.8M SCRT each, or about $473K each (~$946K combined) at the same price assumption below. That’s already short of the $2.74M Lean estimate for year one, let alone Comfortable. Where are the extra funds coming from?

Remediation. There will be no backtracking on remediation. Third parties are involved, and details beyond what is shown here will be publicized when all parties are ready. We firmly commit to the numbers for hack victims, and we are in touch with the required parties.

Remediation shortfall: the allocation improves the odds for victims; it does not guarantee full recovery.

I appreciate the allocation dedicated to hack victims here, but based on the current draft figures, this shortfall seems significant, and turns “remediation” into a symbolic gesture rather than practical compensation.

Approximately $4.67 million was hacked, and the current SCRT market cap is ~$12,000,000. The Remediation bucket is 44M SCRT, 3.1% of the 1,441M post-mint total. This is worth approximately $366,000, assuming total network value holds roughly steady through the mint (so post-mint token price ≈ current market cap ÷ post-mint supply). That’s under 8% of the total lost amount, or under 10% of the amount excluding assets still sitting in the attacker’s Axelar wallet.

On top of that, based on the vesting proposal, 30% unlocks at execution, and the remaining 70% vests linearly over 2 years following a 6-month cliff. So the last of it isn’t fully unlocked until 2.5 years post-execution. In the best case, victims collectively receive about 3% of the total amount lost upon execution of this proposal, and then have to wait up to two and a half years to collect the remaining 5-7%, now locked in SCRT instead of the assets they lost.

To be clear, I’m not asking for a bigger mint, just raising this as a concern about allocation and the stated intent of the proposal. I’m aware that Gamma R&D and Axelar arguably bear more direct responsibility for this loss than the Secret community does, and that ideally the remediation would be on them, not on the Foundation and SCRT holders. But I think it deserves an explicit acknowledgment that this proposal doesn’t really provide practical compensation, and it’s not clear why the vesting schedule was set up that way.

[cow.level]

I support the direction of this proposal. SNF has consistently demonstrated that it cares about the long-term interests of SCRT holders and the Secret community. Secret has an awesome history and survived multiple existential events over the years that could have ended the network, but here we are again. The chain definitely needs a new entity and a fundamental rethink of how core development is funded, managed, and held accountable to the community.

My biggest remaining question is how the core development team will actually be structured and managed: who sets technical direction, how priorities are decided, what accountability looks like, etc. I’d like to see more detail there, but overall I strongly support moving this proposal forward and figuring out those questions as a community.

[snf_admin]

Hi @crypto_mentions – sorry to hear that you were affected by the hack, and thanks for the questions, which I’ll try to address directly.

Your math is correct, but the foundation budget does work if you take into account the rest of the tokenomics, as explained below:

Unlocks and operating revenue are different lines in the budget. The vesting schedule does control when principal becomes spendable, but it was never the plan to fund operations by selling unlocked coins. Vested coins can be staked from day one (§2), and the Foundation will stake the buckets it manages. Staking rewards on the full staked allocations - not on the unlocked fraction - are the primary ongoing revenue for operating costs, potentially supplemented over time by real product revenue. We would only sell the principal to supplement the primary revenue as needed. The operating budget, including what runs at lean versus comfortable levels, is included on the forum post to give context to the overall tokenomics. In reality, we have several levers, including spending less, staffing lower, or using the allocated tokens (principal) themselves to cover expenses.

Regarding remediation, and why the vesting is shaped the way it is: before setting these numbers we reviewed the major hack-response precedents: Bitfinex, BadgerDAO, Beanstalk, WazirX, Terra. The closest structural match to our situation, a new-token event compensating affected holders, is Terra’s compensation airdrop, and our schedule follows that model: a meaningful unlock at execution, then linear vesting completing within 2.5 years. Terra used 30% upfront with two-year vesting; so do we. It is the only precedent in that set that actually completed its distributions, which is why we modeled on it.

You’re right that 44M SCRT at today’s price does not equal $4.67M, and we are not trying to equate the two. The same math applies to all buckets in this proposal - at current valuation, the plan works, but is not ultimately satisfying. The premise of continuance is that a functioning chain with real products is worth more than an abandoned one, and the remediation allocation is built to scale with that recovery. Victims hold an asset tied to the network they’re being compensated in, and that fund equates to over 3% of the total supply. That is the same way Terra’s model worked. We are targeting a compensation that is a percent of the total supply rather than a fixed payout from a treasury we don’t have.

So to explicitly acknowledge your point: at execution-day prices, this allocation is partial compensation, not full recovery as §5.6 states in plain terms. What I’d add is that the realistic comparison isn’t between this allocation and full recovery, it’s between this allocation and the zero that was on the table before this proposal existed.

• Lisa

[zenopie]

If you are going to dilute SCRT so much why don’t you just merge with partisia blockchain and make secretswap truly multi chain built on scrt

[snf_admin]

My contacts at Partisia are supportive of our direction and have offered to help in any way we may need. With that said, I don’t see merging right now as meeting the objectives: which are to provide a remediation plan and ensure no disruption of the chain.

I’m happy to discuss other options for the future, once we are in a more sustainable and stable situation. There would have to be real value that the community could get behind for any move, merge, or migration plan.

And it’s not in our current frame of reference, just to be clear. We’re committed to a very definite course of action that is intended to provide the best outcome for the community and the ecosystem.

• Lisa