Secret Network Eyes Exit from Cosmos to Arbitrum After $4.7M Bridge Hack

TLDR

• Secret Network is proposing to move its SCRT token from the Cosmos blockchain to Ethereum layer-2 network Arbitrum.
• A $4.7 million bridge exploit in June exposed security risks from aging, under-maintained code.
• The team says AI tools are making it cheaper and easier to find and attack old code vulnerabilities.
• Cosmos total value locked has dropped 88% from its 2021 peak; Arbitrum holds $17.4 billion in secured value.
• SCRT token fell 24% in 24 hours following the announcement, trading at around 4 cents.

Privacy blockchain Secret Network wants to leave the Cosmos ecosystem and move to Ethereum layer-2 network Arbitrum. The proposal, published July 7, came weeks after a bridge exploit drained $4.7 million from a connected bridge.

The team said the move is primarily about security. Secret Network has operated on Cosmos since 2020, but it now says the ecosystem has changed and older code is becoming a liability.

The team pointed to artificial intelligence as a growing threat. It said AI models can now scan smart contracts, trace logic, and turn overlooked bugs into working exploits faster than ever before.

The June bridge exploit, involving the Axelar-Secret IBC bridge, exposed $4.7 million in bridged assets. The team said the breach did not affect the core SCRT token or its privacy protocol, but it showed the danger of legacy code in a smaller ecosystem.

Cosmos Ecosystem Has Lost Ground

The Cosmos ecosystem has seen a sharp decline since its 2021 peak. Total value locked across Cosmos chains now sits around $2 billion, down 88%. Secret Network itself has just $1.3 million locked on the platform, according to DefiLlama.

Arbitrum, by comparison, has $17.4 billion in total value secured, making it the largest Ethereum layer-2 network by that metric, per L2Beat.

The team said builders and liquidity have moved away from Cosmos. Tooling that projects once depended on has grown unreliable, and several anchor projects have already left.

Secret is not the first Cosmos project to make this move. Stablecoin chain Noble announced a move to Ethereum in January. Privacy chain NilChain left for Ethereum in February. Sei Network completed a full Cosmos-to-Ethereum transition in June.

Migration Plan and SCRT Token Impact

If the governance vote passes, SCRT Labs plans to take a snapshot of SCRT balances on September 1. That snapshot will be used to issue a new ERC-20 version of SCRT on Arbitrum.

Native and staked SCRT will qualify for the new token. Bridged SCRT, sSCRT, contract-held tokens, and IBC assets will not count. Holders will need to convert eligible balances before the snapshot date.

The team plans to reduce token inflation from 9% to 5% after the migration. SCRT will remain the governance token on the new network.

Official support for the Cosmos-based Secret layer-1 would end on September 1. The old chain could continue running if validators choose to maintain it independently.

The proposal has not yet been put to a vote. The migration will not go ahead if the community rejects it.

SCRT holders reacted poorly to the news. The token dropped around 24% in the 24 hours after the announcement, trading near $0.041. That price is more than 99% below its 2021 all-time high.

Secret Network’s team also said it will release the network’s source code under an open-source license as part of the transition.

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