Staking service provider Smart Stake is the latest to announce it will no longer support the privacy-focused Secret Network.
The news comes after an internal conflict involving the project’s co-founder, Tor Bair, became public, however, in its Twitter post on Sunday, Smart Stake—apart from “current events”—also cited Secret’s “complex/stress validator operation.” Network, and cost/effort ratio.
Scheduled for February 21, “the closure will be gracious and there will be no cuts to any delegates.”
In the proof of ownership (PoS), slashing is a form of punishment designed to ensure validator accountability and responsible behavior. Although each protocol has its own specific deduction mechanism, the general effect is the same: if a validator violates the staking rules, a percentage of the tokens staked is deducted.
Smart Stake is currently the 45th largest validator for the Secret Network with less than 1,200 delegates, which equates to 0.61% of the voting power, according to secret.smartstake.io. It’s also not the only validator to leave the network.
In addition to leadership issues, other validators cite stricter operating requirements for network validation as reasons to stop validating.
Azul Collection and Domerium Labs also announced their departure from the validator rankings last month. Azul said it will “focus on the application layer” of the protocol, whereas Domerium said that “the concerns voiced yesterday, regarding the Omega 1.6 update, have become a reality.”
Other validators are also called Kingnodes said it will “pause validation” on January 14th.
Decryption did not immediately hear back from Smart Stake and Secret Network after reaching out for additional comments.
Secret Network’s leadership conflict
The latest development comes after Guy Zyskind, founder and CEO of SCRT Labs, took to the project’s public forum to reveal that after the Secret Foundation sold a large number of Secret (SCRT) tokens last year, a “significant portion” of proceeds — figures in the low to medium seven figures — cashed in by the project’s co-founder, Tor Bair, as dividends.
“These acts are not disclosed in any financial reports provided to the community by the Foundation, which Tor has introduced as a non-profit organization on several occasions,” wrote Zyskind.
The CEO added that the Q4 2021 report showed cash inflows of around $4 million for the Secret Foundation, but made no mention of the aforementioned dividend draw.
Bair has his own version of events as he claims the draw is part of his share of private tokens.
According to Bair, he started giving out tokens on June 1, 2020, when the Secret Foundation was founded.
“Instead of paying out my private tokens in December 2021, I converted my share of tokens to USD at an OTC rate and the Secret Foundation distributes these funds as dividends,” said Bair, adding that this information could be verified in a 2021 tax filing previously reviewed by SCRT. Labs.
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