The Secret Network, known for its focus on privacy, is considering a significant shift from its existing Cosmos-based blockchain to the Ethereum Layer 2 platform known as Arbitrum. This potential migration arises from growing concerns regarding security vulnerabilities associated with outdated integration code, which has increasingly come under threat due to advanced AI tools used for exploitation.
A critical incident earlier in 2026 serves as the backdrop for this move. The Axelar-Secret IBC bridge experienced a major breach, resulting in a loss of approximately $4.7 million. SCRT Labs, the organization overseeing Secret Network, views this incident as indicative of a larger issue: the legacy code that no longer aligns with contemporary security needs and is susceptible to novel, sophisticated attacks.
In response to these challenges, SCRT Labs proposes a method they describe as controlled demolition of the original chain while launching a rejuvenated version on Arbitrum. A snapshot is planned for September 1, 2026, which will determine who is eligible for a token conversion from the original SCRT to a new ERC-20 version on Arbitrum. Importantly, only SCRT tokens that are both native and staked in self-custodied wallets at this time will qualify for this transition.
The strategic choice of Arbitrum is significant. It aims to facilitate Secret Network’s transition towards applications focusing on confidential AI and verifiable computing. While Secret Network has historically operated within the Cosmos ecosystem, which offers interoperability via IBC, it lacks the extensive liquidity pools and developer-friendly tools available in the Ethereum space. By choosing Arbitrum, SCRT can benefit from Ethereum’s robust infrastructure without incurring the high gas fees associated with its mainnet.
After the snapshot date, SCRT Labs plans to halt any formal maintenance on the original Cosmos chain. They will also share the source code under a permissive license, which would allow third-party validators the opportunity to sustain the old chain should enough staking power persist.
Furthermore, this migration brings about a notable economic adjustment: the staking inflation rate for SCRT will decrease from 9% to 5%. This shift reflects a transition from prioritizing early participation of validators to a model that emphasizes the utility of the token.
For current holders of SCRT, community governance approval is essential for the proposal to proceed. This means that token holders will need to vote on the migration. The upcoming snapshot poses a crucial deadline; any holders using custodial or other non-qualifying formats must transfer their tokens to self-custodied wallets by September 1, 2026. Failing to do so may result in exclusion from this significant transition.