What is Secret Finance?
Secret Finance encompasses all decentralized financial (DeFi) applications enabled by smart contracts built on Secret Network. Since smart contracts on Secret Network are privately encrypted, Secret Finance applications are private by default, meaning your sensitive financial data will be secure and protected from onlookers, nefarious actors, and even front-running bots!
Secret Finance gives users privacy protections for their financial data from the start. However, your financial data can still be made publically available to those you trust, auditors and compliance officers, and third party wallets and explorers. With Secret Finance, users are given the power to choose how their sensitive financial data is shared, while still reaping the benefits of the decentralized web.
Traditional DeFi vs Secret Finance
DeFi is a collective term for financial products and services that are accessible to anyone who can access a blockchain network – anyone with an internet connection. With DeFi, the markets are always open and there are no centralized authorities who can block payments or deny you access to anything. Services that were previously slow and at risk of human error are automatic and safer now that they’re handled by code that anyone can inspect and scrutinize.
Until now, traditional DeFi applications built on smart contract platforms like Ethereum came with one major tradeoff – all financial data is public by default. Anyone with access to your wallet address can query to find previous transaction history, wallet balances, and account activity. DeFi applications expose data, placing users at risk of targeted attacks from hackers and front-running MEV bots.
With Secret Finance, DeFi and privacy no longer have to be mutually exclusive. DeFi applications built on Secret Network are private by default and subsequently front-running and MEV resistant, making the future of Web3 more secure and safer for everyone.
Front-running and MEV resistance
Front-running is the process where malicious actors trade with inside information of a future transaction that will affect its price substantially. This can be done by purchasing a specific cryptocurrency with the knowledge that a large purchase is about to occur. Although this seems unfeasible, due to the public nature of blockchains, users can see transactions and their corresponding gas prices before a block is mined. This also allows for Miner Extractable Value (MEV), the scenario in which miners can determine the order of when transactions are processed on the blockchain and exploit that power to their advantage. These malicious actors submit a transaction with a higher gas price resulting in their transaction being mined first.
Front-running and MEV results in risk-free profit for the malicious actors at the expense of individuals.
Programmable privacy in DeFi solves the problem of front-running. Since orders are never visible on the mempool, no attacker or malicious miner can front-run orders and profit at users’ expense.
What can you do with Secret Finance?
Secret Finance currently has a number of key functionalities. These include:
- Swap Secret Tokens
- Provide liquidity for Secret Token pools to earn attractive yields
- Exchange assets peer-to-peer privately within a sealed bid auctions
There are also a number of financial products currently in development that aim to bring privacy to DeFi, including lending products, private tokenized assets, gambling applications, and more.
Build Secret Finance
If you are interested in building applications or financial tools on Secret Network, come join our developer community! Our team is already working with a number of developers to build new Secret Finance applications, and we would love to collaborate and share resources with you.
By building Secret Finance, you can make programmable data privacy possible for DeFi and help make Web3 more sustainable and secure for the future generations of DeFi users.