**Counter-Proposal: Continue Secret Network on Cosmos Under Community Stewardship, with Remediation for Affected Users
Summary**
This proposal asks SCRT stakers to reject the migration of $SCRT to Arbitrum and instead affirm the continuation of the existing Cosmos-based Secret L1 under community stewardship, coordinated by the Secret Network Foundation.
A YES vote signals the community’s support for:
- No migration. $SCRT remains the native coin of the existing Secret L1. No snapshot, no ERC-20 mint, no Redeemer contract.
- Community stewardship. SNF assumes coordination of core development, maintenance, and validator operations of the Secret L1 following SCRT Labs’ announced end of support on September 1, 2026, building on the source code Labs has committed to release under a permissive open-source license.
- Treasury repurposing. The network treasury and community pool are repurposed to fund (a) ongoing network maintenance and development under SNF coordination, and (b) a dedicated Remediation Pool for users affected by the Axelar bridge incident.
- Recovery of Labs-associated tokens. Tokens held in wallets associated with SCRT Labs (Appendix A) are allocated between two purposes: a Remediation Pool to restore value to affected users, and an SNF Stewardship Treasury to fund the engineering capacity required to maintain and upgrade the chain going forward. SCRT Labs will be asked to work in cooperation with SNF to reallocate the tokens.
A YES result is a mandate to proceed. It does not by itself move any funds, deploy any contract, or change any chain parameter. Each implementation step (stewardship transition, treasury repurposing, and token recovery) will be executed through subsequent upgrades.
Rationale. Tokens were allocated to Labs to fund its role as core developer of the Secret L1. Labs has announced the unilateral termination of that role effective September 1, 2026. With the role abandoned, the community — through governance, the network’s highest authority — reallocates those resources to the two purposes Labs’ departure leaves unfunded: the users the network failed to protect, and the continued development of the network itself.
Background
Earlier this month, SCRT Labs announced its intention to migrate $SCRT from Cosmos to Arbitrum via a one-time snapshot and ERC-20 mint. Labs has now submitted a signaling proposal to that effect. Labs has stated it will conclude development and support of the Secret L1 on September 1, 2026, regardless of the vote’s outcome.
Over the past weeks, the Foundation and the community have appealed to Labs — publicly and privately — to address the community’s two central concerns before any migration:
- Viable tokenomics. Under the migration plan, $SCRT loses its gas and consensus-security utility and retains only governance utility. The community has been near-unanimous that a pure governance token is not a viable foundation for the network’s future, and historical market data supports that view.
- A binding remediation plan. The migration proposal contains no committed remediation path for users affected by the Axelar bridge incident. Labs’ proposal defers remediation to a future SNF proposal, “contingent on technical feasibility and risk assessment” — language that commits to nothing. Feedback across every stakeholder channel has made clear that a migration without binding remediation will face overwhelming hostility from the ecosystem.
Labs has declined to pause the migration timeline to resolve these concerns, and has declined to make remediation a binding condition of migration. The Foundation has therefore concluded that the community’s interests are best served not by following $SCRT to Arbitrum as a governance-only token, but by continuing the network we already have — and using the resources of that network to make recompense to affected users.
The Proposal
1. Continuation of the Secret L1
The existing Cosmos-based Secret L1 continues as the canonical Secret Network. $SCRT retains its full native utility: gas, staking, consensus security, and governance. No snapshot or migration occurs under this proposal.
2. Community stewardship under SNF coordination
Following September 1, 2026 or whenever Labs ends support for Secret Network, SNF will coordinate:
- Maintenance and development of the node software, building on the open-sourced Labs codebase;
- Validator communications and coordinated upgrades;
- Grants and funding for ecosystem developers, drawn from the repurposed treasury.
The Foundation does not have full engineering capacity to maintain the chain today, but over the past three years it has prioritized building that capacity internally. SCRT Labs was, until two months ago, subsidizing the technical work performed on the chain by SNF personnel. SNF his connected with qualified developers to lead protocol maintenance and upgrades, funded from the SNF Stewardship Treasury described below.
SNF will publish a stewardship plan, including named maintainers and a 12-month development roadmap, prior to taking over support for Secret Network. Labs has announced that it will not continue support past September 1st, regardless of the outcome, so there is no other viable option for continuity of the network.
3. Treasury repurposing
The network treasury held by Labs and by SNF will be repurposed toward the following two goals, in a fixed 60/40 proportion:
- (60%) Remediation Pool: an on-chain pool dedicated to restoring value to users affected by the Axelar bridge incident.
- (40%) Network continuity: funding core maintenance, security audits, and infrastructure.
We don’t know how much Labs is willing to allocate to this new treasury. The split between the two pools will therefore be fixed as percentages as noted above, with the final wallet list and on-chain balances been published for community review. The Foundation’s working principle: remediation of affected users is the first claim on recovered funds, and the network continuity allocation will be applied to a published engineering budget and runway.
Rationale. These tokens were allocated to Labs to fund its role as core developer of the Secret L1. Labs has announced the unilateral termination of that role effective September 1, 2026. With the role abandoned, the community — through governance, the network’s highest authority — reallocates those resources to the two purposes Labs’ departure leaves unfunded: the users the network failed to protect, and the continued development of the network itself.
Mechanism. Execution requires a signaling vote and a scheduled upgrade following a second proposal. In the event that SCRT Labs does not agree with the community’s will, SNF will seek to protect the decision of the community through other means. Following this, there will be transparent reporting of affected users identified, and a vesting schedule with periodic transparency reporting for the community.
Distribution. After upgrading the breached Axelar contract, remediation will be distributed pro-rata to affected users at the time of the Axelar bridge incident, subject to a structured schedule. SNF will seek cooperation from Axelar to finalize the complete plan.
Why Not the Labs Plan?
The Labs migration proposal, and Labs’ responses to the Foundation’s recommendations, leave the community with:
- A governance-only ERC-20 with no intrinsic utility, dependent on future, unspecified tokenomics work;
- A remediation “commitment” that is explicitly contingent and undefined, announced only after weeks of community pressure;
- A Foundation with no committed funding beyond a mint that itself requires future governance approval;
- A hard September 1 deadline imposed unilaterally, with Labs stating it will end support “regardless of how the vote goes.”
The community is being asked by Labs to vote YES on a mandate while every substantive protection — staker rewards, SNF funding, and remediation — is deferred to later votes under time pressure. This proposal inverts that structure: the community keeps the working network it has, and the binding commitments come first.
Risks and Considerations
The Foundation believes the risks to this path are the following:
- Conflict risk. SNF going against the stated intention of SCRT Labs is unprecedented for this network and have unexpected consequences.
- Chain-continuity risk. Labs may ignore the results of the voting and proceed with its Arbitrum snapshot regardless of the indicated will of the community, resulting in two assets claiming the SCRT name. Exchange listings, bridge support, and ecosystem alignment will be contested. The Foundation will engage exchanges and infrastructure providers ahead of September 1. Any ecosystem participants are encouraged to reach out directly to SNF with ideas or concerns.
- Execution risk. Continuing the L1 without Labs requires rebuilding core engineering capacity. The Foundation has been building its internal competency on Secret Network through hiring over the past three years and believes it has a solid grasp of the requirements to maintain the chain. We also believe that the effort SNF can put forward will be higher than the effort provided by SCRT Labs to maintain and improve the network on either chain.
The Foundation judges these risks to be manageable — and preferable to the certain outcome of the Labs plan: no focused development on the chain (either Cosmos or Arbitrum), a utility-less token, an unfunded Foundation, and unremediated users.
Voting
- YES — Continue the Secret L1 under community stewardship; repurpose the treasury for network continuity and remediation; mandate the recovery of Labs-associated tokens into the Remediation Pool, subject to binding follow-up votes.
- NO — Do not pursue this path.
- ABSTAIN / NO WITH VETO — Per standard governance semantics.
Submitted by the Secret Network Foundation on behalf of the Secret Network community.