Secret Network's 99% Drop Spurs Move to Arbitrum Citing AI Risks
By John Nada·Jul 8, 2026·4 min read
Secret Network eyes Arbitrum amid AI security concerns, moving away from Cosmos. Token SCRT plunges over 99% from peak.
Secret Network, a privacy-focused blockchain, has proposed a significant shift from its longstanding home on Cosmos to Ethereum's layer-2 solution, Arbitrum. This move is primarily driven by increasing security concerns stemming from advancements in artificial intelligence, as reported by Cointelegraph.
Since 2020, Secret Network has been operating privacy-preserving smart contracts on Cosmos, an ecosystem that once boasted strong momentum. However, the landscape has drastically changed over the years, prompting Secret Network to reconsider its foundational infrastructure. The team expressed that the 'environment has changed,' emphasizing that their primary concern is security. "The security risk is the part we take most seriously," they stated, highlighting that AI advancements have made analyzing old code dramatically easier.
Recent developments in AI, such as the release of Anthropic’s Claude Mythos 5, have significantly enhanced the capabilities for discovering and exploiting code vulnerabilities. This increased efficiency has reduced the cost of potential attacks on outdated systems. The team pointed to the Axelar-Secret IBC bridge exploit as a pertinent example of how AI can exacerbate existing security threats. This incident, involving a loss of $4.7 million in bridged assets, underscored the urgency for a more secure operational environment, which Arbitrum is poised to offer.
Cosmos, once a thriving ecosystem, has witnessed a substantial decline in appeal. The total value locked (TVL) within the Cosmos ecosystem is approximately $2 billion, representing an 88% drop from its peak during the 2021 bull market. In stark contrast, Arbitrum is leading the layer-2 networks with a robust $17.4 billion in total value secured, according to L2Beat.
Secret Network's current total value locked is just $1.3 million on Cosmos, highlighting a significant disparity and prompting the network to seek a more stable and supportive environment. The Secret team described Arbitrum as having 'deep liquidity, tooling, wallet and exchange support, and thousands of builders composing with one another.' This environment promises a more stable foundation, addressing the thinning liquidity and dwindling support that has plagued Cosmos.
The proposed transition, however, has not been smooth for Secret Network. The announcement coincided with a sharp 24% drop in SCRT's value within a single day, plummeting to just 4.1 cents. This represents a staggering decline of over 99% from its 2021 highs, reflecting the uncertainty among SCRT holders about the network's future direction.
Secret Network's woes are not isolated. Other networks, such as NilChain and Sei Network, have also abandoned Cosmos in favor of Ethereum. In February, NilChain, a privacy-focused blockchain built with the Cosmos SDK, made the transition to Ethereum. Similarly, the Sei Network completed a full Cosmos-to-EVM transition in June, shutting down its native Cosmos transaction layer entirely. Even Noble, a stablecoin blockchain, announced its exit from Cosmos earlier this year, further illustrating the migration trend towards more supportive ecosystems.
The decision to move to Arbitrum is not just about escaping the vulnerabilities associated with AI and outdated code but also about embracing an ecosystem that offers robust support and infrastructure. The Secret team has outlined plans for a one-time snapshot of SCRT balances on September 1, which will be used to issue a new ERC-20 SCRT contract on Arbitrum, further solidifying their commitment to the transition.
The challenges faced by Cosmos have been multifaceted, with its decline not solely attributed to AI-related security risks. The thinning liquidity, as builders drift to other ecosystems, and the perceived instability of the tooling that was once relied upon, have contributed to the erosion of its once-strong foothold.
Arbitrum, on the other hand, has established itself as a leading layer-2 network, attracting builders and liquidity from its competitors. This shift in dynamics underscores the broader trend within the blockchain space, where networks are increasingly seeking environments that offer better infrastructure, security, and support.
While the proposed move to Arbitrum by Secret Network is still subject to a governance vote, the rationale behind it is clear. The pressing need for a secure and liquid environment has driven Secret Network to reconsider its foundation, seeking a fresh start within Ethereum's thriving ecosystem. The outcomes of this transition remain to be fully realized, but the motivations behind it are rooted in the evolving landscape of blockchain technology and the challenges posed by advancements in AI.