Secret Tokens are the privacy tokens powered by Secret Contracts on Secret Network. Using Secret Contracts, the network achieves privacy network effects.
SNIP-20 Tokens (a.k.a. SecretTokens)
Leveraging secret contracts, Secret Network supports the creation of privacy preserving fungible tokens, which are called Secret Tokens. Combining the programmability of ERC-20s with the privacy of Zcash or Monero, SecretTokens unlock important use cases and create new value. These tokens follow the SNIP-20 specification, which is loosely based on Ethereum's ERC-20 and ERC-777 standards and is a superset of CosmWasm's CW-20.
What is encrypted?
Transactions (receiver, amount)
Any transaction, all rolling balances and contract interactions are forever kept encrypted, ensuring both anonymity and confidentiality. Each person can still query their own (and only their own) balance, as well as send tokens to others, privately. Additionally, viewing keys can be generated to allow third parties (including other contracts) to view your balance, without actually taking control of your funds.To illustrate, Secret Network block explorer only shows interactions (without specifying specific function calls) with a SNIP-20 contract and total supply (essentially TVL) of tokens, plus transfers and holdings corresponding to the viewer.
Privacy Network Effects
Imagine a system where any operation you do, across any DeFi service (be it trading, staking, lending, providing liquidity, issuing synthetic tokens, etc.) happens with complete privacy. That’s the vision of programmable privacy and Secret Network. There is a big difference between transactional and computational privacy. Secret contracts give application developers the power of programmable privacy features, which are composable.
Each DeFi user actually gains more privacy with every additional service and every dollar worth of additional value locked in the ecosystem, leading to privacy network effects. The aggregate liquidity across all DeFi applications quantifies the level of privacy obtained (a.k.a. the anonymity set).
SCRT vs sSCRT
The Secret Network blockchain is powered by the SCRT token. It can be delegated to validators to secure the network for staking rewards and it is also used to pay for network fees. This token can be purchased in centralized exchanges.
SecretSwap also supports the sSCRT token, which is the SNIP-20 implementation of SCRT. This token has all the privacy features of secret smart contracts, however it cannot be used to stake or to pay network fees. SCRT can be swapped for sSCRT via the Keplr Wallet or via the main SecretSwap app.
Pro tip: Always keep a few un-staked SCRT in your wallet for network fees.
Viewing Keys and Compliance
Privacy by default means the users have control of who sees what! To increase their usability, Secret Tokens are designed to enable owners to share verifiable proofs with anyone. This is also critical to build a compliant financial ecosystem. Viewing Keysare used to validate the identity of someone who queries a specific account. User-supplied strings are used for entropy for generation of the viewing key. Viewing keys are designed to be used by 3rd parties like auditors, wallets and explorers when users opt-in to share this information.