Privacy-focused layer-1 blockchain Secret Network is proposing to migrate from its long-time home on Cosmos to Ethereum layer-2 Arbitrum, citing increasing security risks from artificial intelligence-assisted exploits, among other reasons. Secret Network has been operating privacy-preserving smart contracts on Cosmos since 2020, but the team stated that the environment has changed significantly.
"The security risk is the part we take most seriously," the team said in a statement. "Old code is becoming dramatically easier to analyze. With AI, the cost of attacking stale code is falling across the board." The recent Axelar-Secret IBC bridge exploit highlighted growing security risk from aging, under-maintained code. The release of advanced AI models such as Anthropic's Claude Mythos 5 has dramatically increased capabilities for discovering and potentially exploiting code vulnerabilities.
The team described Arbitrum as having deep liquidity, tooling, wallet and exchange support, and thousands of builders. In contrast, liquidity has thinned on Cosmos while builders have drifted to other ecosystems. "The tooling you’d want to count on is shakier than it used to be," they added, noting that many projects that once anchored Cosmos have migrated.
The proposal requires a governance vote. A one-time snapshot of SCRT balances is planned for Sept. 1 to issue a new ERC-20 SCRT contract on Arbitrum. The total value locked in the Cosmos ecosystem is around $2 billion, down 88% from its peak. Arbitrum leads layer-2 networks with $17.4 billion total value secured. Secret Network itself has just $1.3 million in TVL on Cosmos.
Understanding the AI exploit threat
The core argument driving Secret Network’s proposed move centers on the evolving threat landscape. AI models, particularly large language models trained on code, can now automatically scan smart contracts for vulnerabilities, identify edge cases, and even generate proof-of-concept exploits. This drastically reduces the time and expertise required to find bugs in legacy code. For a blockchain that has been in operation since 2020, much of its codebase relies on older versions of Cosmos SDK and underlying libraries that are no longer actively maintained.
"Attacks that used to take deep manual effort are getting cheaper as models get better at reading contracts, tracing assumptions, and turning a forgotten edge case into a working exploit," the team warned. This is not theoretical: in June 2026, Secret Network’s bridge suffered a $4.7 million exploit due to an "infinite mint" bug, which the team believes could have been discovered and exploited more quickly with state-of-the-art AI tools.
Liquidity and ecosystem shifts
Beyond security, the decision highlights a broader trend of fragmentation in the Cosmos ecosystem. At its peak during the 2021 bull run, Cosmos hosted over $16 billion in total value locked (TVL), but that figure has since plummeted to roughly $2 billion, according to DefiLlama. Many decentralized applications and infrastructure projects have moved to Ethereum layer-2 solutions, drawn by deeper liquidity, better tooling, and a more active developer community.
Arbitrum, in particular, has emerged as the leading Ethereum layer-2 by TVL, with $17.4 billion secured across its bridges and applications. It supports the Ethereum Virtual Machine (EVM) natively, making it easier for projects to deploy existing Ethereum-compatible smart contracts. For Secret Network, migrating to Arbitrum means gaining access to a vibrant DeFi ecosystem, including major exchanges, wallets, and cross-chain bridges that have largely bypassed Cosmos in recent years.
Not the first to leave Cosmos
Secret Network is not alone in its departure from the Cosmos ecosystem. In February 2026, privacy-focused blockchain NilChain, which was also built using the Cosmos SDK, completed a migration to Ethereum. In June, Sei Network transitioned from its native Cosmos transaction layer to an Ethereum-based infrastructure, effectively shutting down its Cosmos chain. Stablecoin blockchain Noble also announced its move from Cosmos to Ethereum in January 2026.
These migrations reflect a growing perception that the Cosmos ecosystem has struggled to maintain developer retention and liquidity depth compared to Ethereum and its layer-2 networks. While Cosmos still offers unique features like inter-blockchain communication (IBC) protocol, the practical advantages appear to be diminishing as projects seek more robust economic security and network effects elsewhere.
Token holder reaction and next steps
The announcement of the proposed migration led to a sharp sell-off in the SCRT token. Over the past 24 hours, SCRT dropped 24% to $0.041, down more than 99% from its all-time high of $7.50 in October 2021. Market participants appeared uncertain about the implications of the move, as it introduces a migration risk and potential disruption to existing applications and liquidity pools on Cosmos.
The governance vote will be critical. If approved, SCRT holders will receive an equivalent amount of a new ERC-20 version of SCRT on Arbitrum, while the original Cosmos-based token will likely be phased out. The snapshot is scheduled for Sept. 1, giving token holders time to decide whether to support or oppose the proposal.
The Secret Network team has stressed that the move is designed to ensure the long-term viability of the project. "For SCRT to endure, it needs a new stable home, and the Ethereum ecosystem is that home," they stated. Whether this bet pays off will depend on the successful integration of Secret Network’s privacy features into Arbitrum’s infrastructure and the continued development of its application layer.
As AI-driven threats continue to evolve, the choice to relocate may become a template for other aging blockchains facing similar pressures. The intersection of security, liquidity, and ecosystem vitality is reshaping where projects choose to build, and Arbitrum is increasingly becoming a destination of choice for those seeking to future-proof their operations.
Source: Cointelegraph News