SCRT

Secret Network validator shuts down nodes after leadership turmoil

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 shut 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 did not mention 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 nonprofit 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 Bair’s $7 sale price.

Secret Network resolves network vulnerability following white hat disclosure

Researchers were able to decrypt all of Secret’s internal transactions using an exploit.

On Nov. 30, Guy Zyskind, CEO of privacy smart contract blockchain Secret Network, said that developers had patched a privacy-related vulnerability and users’ funds remain secure. In a document dated Nov. 29, Secret Network wrote that users or developers required no action and that all active nodes were upgraded to correct the exploit on Nov. 2.

2/ You can read the post for the main details, but the important part is that the vulnerability was mitigated and unlikely to have been exploited. Most importantly, funds were never at risk, because Secret intentionally does not rely on SGX for correctness – only privacy.

— Guy Zyskind (@GuyZys) November 29, 2022

The sequence of events, unveiled late yesterday by the Secret Network developers, began when a group of white-hat computer science researchers contacted the Secret team on Oct. 3 regarding a recently disclosed xAPIC (Advanced Programmable Interrupt Controller) architectural bug. The exploit allowed uninitialized memory reads in certain Software Guard Extension-enabled (SGX) Intel CPUs. Secret Network leverages SGX technology to provide confidential execution of smart contracts.

As stated in their paper, researchers first registered a server as a validator node on the Secret Network, even when they did not have sufficient funds to be trusted to actively validate transactions. The registration process then stored a copy of Secret’s global consensus seed inside its SGX enclave. Next, through the aforementioned CPU glitch, researchers extracted the consensus seed of its Secret Node and its private Intel Enhanced Privacy ID key. Finally, with these items, they were able to break Secret’s privacy-preserving features and decrypt the internal state of all smart contracts on the network, as well as the digital assets embedded in them.

Secret developers verified the exploit on Oct. 4 and devised a plan to patch the vulnerability together with researchers and Intel staff. First, nodes were forcefully ejected from the network, and their secret keys deleted. After that, nodes could only rejoin the network if they patched all known vulnerabilities, which was completed on Nov. 2. “With this upgrade, it is now infeasible to mount xAPIC attacks against the Secret Network mainnet,” wrote the Secret Network team.

In addition, new nodes joining the network will be limited to server-class hardware only, as to limit the attack surface that user-class hardware presents. Founded in 2015, Secret Network currently has a market cap of $131 million through its native token SCRT. The firm partnered with director Quentin Tarantino to launch Secret NFTs last November.