Secret Network validator shuts down nodes after leadership turmoil

January 30, 2023 Coin Telegraph

An internal conflict at the privacy-focused Secret Network has resulted in at least one validator throwing in the towel.

A major validator for the privacy smart contract layer-1 blockchain Secret Network has announced that it will no longer provide nodes and support for the network.

On Jan. 29, major validator Smart Stake announced that it would be shutting down its Secret Network validator nodes on Feb. 21.

Smart Stake cited “complex/stressful validator operations, cost/effort of validator ops, and recent events,” as reasons for withdrawing its services.

Smart Stake is a staking and validator service provider that supports several networks including Crypto.com, Polygon, Cosmos, and until recently Secret Network.

PSA for @SecretNetwork delegates of Smart Stake:

Smart Stake will be shutting down its Secret validator on 21st Feb. Please redelegate to another validator.

Reasons: 1) Complex/stressful validator operations on $SCRT 2) Cost/effort of validator ops 3) recent events
— Smart Stake (@SmartStake) January 29, 2023

The move comes amid revelations by Secret Labs founder, Guy Zyskind, regarding the Secret Foundation’s financial transparency.

On Jan. 28, Zyskind made public allegations that the Foundation and its founder and CEO, Tor Bair, “sold a substantial amount of USD worth of SCRT,” — the native token for the Secret Network — in late 2021.

“Tor cashed out a significant portion of these proceeds,” he alleged.

Zyskind also mentioned a $4 million inflow for the Foundation in its Q4, 2021 report but no mention of the withdrawal.

“This action was not disclosed in any financial reports provided to the community by the Foundation, which was introduced by Tor as a non-profit organization on several occasions.”

Looking forward to resuming writing math proofs and bad code after all the @SecretNetwork drama
— Guy Zyskind (@GuyZys) January 29, 2023

Bair however provided his version of events on the Secret governance forum on the same day. He stated that the withdrawals were part of his share of vested tokens.

“Instead of paying out my vested tokens in December 2021, I converted my vested portion of tokens to USD at the OTC price and Secret Foundation distributed these funds as a dividend.”

He added that “this information is verifiable in our 2021 tax filings, which have been previously reviewed by Labs, and I have previously disclosed this information to them.”

The ongoing internal leadership conflict has rattled at least one network validator provider and the ecosystem’s community.

SCRT prices have remained immune from the internal imbroglio, consolidating around the $0.80 level for the past week. However, the token is down 92% from its October 2021 all-time high of $10.38, and way down from Bair’s $7 sale price.

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$400 million ecosystem fund

“With this funding, Secret Network and its partners aim to scale privacy-first, decentralized applications to global adoption by millions of users,” said Tor Bair, the Founder of the Secret Foundation.

Secret Network is offering $400 million in funding to grow its privacy-oriented ecosystem and expand user adoption.

Secret Network is a decentralized ecosystem that utilizes trusted execution environments to enable private, secure computation over encrypted data. The ecosystem has four components: Secret Tokens, Secret Bridges, Secret Finance and Secret NFTs.

According to a Jan. 19 announcement, the privacy-oriented platform is offering a $225 million ecosystem fund and a $175 million accelerator fund with support from 25 existing investors and partners, including BlockTower Capital, Arrington Capital, Fenbushi Capital, Outlier, Spartan Group, and Figment.

The Founder of Secret Foundation Tor Bair told Cointelegraph the funding would further the network’s aim to "scale privacy-first, decentralized applications to global adoption by millions of users," as he emphasized the importance of Web3 technology:

“Privacy technologies are essential to ensure that Web 3.0 will be empowering and open, rather than an extension of the failures of Web 2.0.”

The ecosystem fund will be used to expand the project’s application layer, network infrastructure, and tooling. The accelerator pool will provide non-dilutive capital, grants and incentives via its native token SCRT to quickly expand user adoption.

Secret Network also revealed that numerous top-tier investment firms recently acquired SCRT positions and joined the ecosystem as critical stakeholders, including Alameda Research, DeFiance Capital, CoinFund, and HashKey.

The ecosystem funding is a part of the Shockwave initiative, a vision for Secret Network’s global growth, which was announced on Jan. 12. Shockwave aims to cement the ecosystem’s standing as a privacy hub for Web 3.0.

Bair said that a global, privacy focused network was an essential part of building a better internet:

“Private-by-default networks and applications create choices for users and allow them to control and consent to how their data is used. The entire Secret community is dedicated to protecting users, providing security, and fighting against surveillance capitalism — a system that exploits instead of empowering.”

The funding news follows Secret Network’s freshly launched auctions for a collection of seven highly-anticipated NFTs issued by Quentin Tarantino on Jan. 17. The collection consists of seven chapters of Tarantino’s original, handwritten screenplay of Pulp Fiction, the first chapter of which has been sold and will be announced on Jan. 24.

Secret Network