Sienna Review — A Secret Network Project
From the Knights Templar to the digital age.
DeFi has been growing for the past years, spearheading the growth of the crypto landscape. It is a mixture f decentralized protocols’ and dApps’ frontends, crypto twitter personas, degens, behemoth VCs with their billions of AUM and seed investments, options traders, and NFT connoisseurs.
People know the identities and wallets of these market participants and can track the activities and actions of users over whole networks. Imagine a world, though, where these traders and investors can keep their info and financial data hidden, guarded in a castle by knights of cryptography.
This will lead us on a historical trip nine centuries ago to the medieval city of Siena and the legendary legacy of the Knights Templar ✠. So strap in for a ride.
It’s a spring day in 1254. A group of traveling merchants just docked their ships at the port of medieval Venice and are heading to the Republic of Florence, home to Leonardo da Vinci, Michaelangelo, and Botticelli. (whose patrons were the Medici family, and were part of Lorenzo de’ Medici’s court.)
Introduction
Sienna Network took its name from the Italian city Siena (Sienna in English), which played a historical role in banking almost a thousand years ago. Sienna was an important trade city in the 12th century and as early as 1135. To support the trade and economic growth of Sienna, the Bishop of Sienna started to offer loans against collateral and interest to Sienna citizens and the many people who traveled to the city to buy goods and sell their products.
The world’s original bankers, the Knights Templar, initiated a vast network of money transfer locations so people could deposit money in the Veneto region and travel to Sienna and the port of Venice without the risk of getting robbed.
Upon arrival at either destination, merchants could withdraw their money from a Templar location by handing in an encrypted document. The Templars had also invented a unique kind of encryption that would allow people to travel with a document that only they could decrypt.
“By today’s standards, the encryption system was straightforward. Of course, the algorithm would be broken within seconds now, but from the years 1100–1300, it was sophisticated and safe enough to be the world’s first industry standard.”
But who were the Knights Templar?
The Knights Templar was a religion-based military order that arose after the first crusade (1099). It protected pilgrims and merchants who were traveling to the Holy Lands and the city of Jerusalem from all parts of Europe. They comprised warrior monks who received lots of funding through donations, had help from kings and the Pope, and later on from a financial system they developed.
They owned churches, farms, and wineries all over Western Europe and parts of the Middle East. Soon they owned a whole fleet of ships and castles. Next, they began selling commodities such as crops, wool, and wine throughout Europe and rented vast swaths of land to tenants.
This letter of credit mentioned above was an early deposit and withdrawal system that enabled all those financial transactions. The Knights Templar are the creators and pioneers of modern-day banking, and they can be characterized as the Western Union of the crusades.
Chinese ‘Flying Money’ & the Bill of Exchange
The Templars were not the first to provide such services. Some centuries earlier, the Chinese Tang dynasty had invented the “feiquan” — flying money — a two-part document that allowed merchants to deposit funds in a regional office and then withdraw the funds in the capital. After those, a new method arose in the 16th century called the ‘Bill of Exchange.’ This was a credit note, an IOU, that wasn’t denominated in the French livre or the Florentine lira but was expressed in a private currency, the ecu de marc. This currency, a promissory note (paper evidence of a debt that a borrower owes a lender), a stamp of solvency with value before any bank, was used by this international network of bankers, allowing traders to exchange credit with goods. This innovation set the foundations of the modern banking system.
When bank loans replaced bills, people stopped realizing that tradable and liquid credit instruments have the characteristics of money.
Modern-Day Impact
By looking at these events, we can understand that this concentration of power in the hands of the few leads to exclusive benefits and privileges for those who run the system — governments and private corporations. In the past, this turning of personal obligations into tradable debt created a form of private money, outside the control of Europe’s kings, which enabled the powerful and rich to operate without relying solely on government-printed money, even though this system was supported and used by the governments as well.
Even in the modern times of the 20th & 21st centuries, this system of global shadowy banking networks remains alive and reigning. Banks are tied with their mutual obligations and benefit from laws that are too complex for anyone else to understand, allowing them to bypass taxes and regulations. It consequently leads to the whole financial system being fragile, corrupt, and unfair to the regular citizens.
Since the early 2000s and in the past, this form of credit has created many problems in the multi-trillion-dollar repo market, with instruments like structured investment vehicles and mortgage-backed securities (CDOs) becoming money-like. Unfortunately, central bankers didn’t protect the system against those threats. Instead, they hid everything, focusing on leverage & loan growth, leading eventually to the collapse of the Lehman Brothers and ‘The Great Recession’ crisis of 2008.
With so much information available online, most people have now realized that there are many alternatives and ways to live without these parasitic, corrupt, and power-hungry forces that feed off the decay of humanity that they have caused. It is now more evident than ever that it’s time for a change, and cryptocurrency systems, with their p2p technology, can offer public, accessible, and sovereign, viable solutions.
As in the time of the Templars, the key to the value of banking activity was information: knowing how to identify solvent merchants and securely sharing this information enabled the extraction of network economies from each of the participants in the same way as with credit cards nowadays.
Templars Ending
When European Christians lost control of Jerusalem in 1244, the Templars lost their reason to exist. But by then, their financial network had grown too strong and vast, and many European royals still owed considerable debts. As a result, the royalty realized that it would be beneficial to them to cease the order’s existence, which was a major global financial institution at the time. As mentioned by historians, King Philip IV (1285–1314) of France, who had enormous debt, coerced the Pope to dissolve the order and seize all Templar assets.
The Templars refused to forgive the King’s debts, so, in 1307, on the site of what is now the Temple stop on the Paris Metro, Philip launched a raid on the Paris Temple — the first of a series of attacks across Europe. Templars were tortured and forced to confess any sin the Inquisition could imagine. Finally, the Pope disbanded the order. Lawyers rented the London Temple. And the last grandmaster of the Templars, Jacques de Molay, was brought to the center of Paris and publicly burned to death.
“History doesn’t repeat itself, but it often rhymes.”
These events can give us lots of insight into how the existing system of banks and governments could try to stop and subvert crypto, either through financial attacks or through the use of the law. For example, the recent collapse of Terra’s $LUNA and $UST could lead to the introduction of new regulations for stablecoins, that way limiting crypto’s transacting freedoms.
The Importance of Privacy-enabled DeFi Services
As we can see, financial systems have been going through various forms and stages of transformation, leading to the existing banking system of private and central banks that exist now. The cryptography of blockchain technology has enabled developers and free-thinkers to create independent, autonomous, and decentralized financial systems like Bitcoin. (which currently is mainly limited to transfers and can be wrapped in Ethereum and other blockchains) DeFi dApps enable the swapping, borrowing & lending of assets and other financial services so that no centralized party and no trust is required. The users’ only risk is code bugs potentially leading to exploits or various financial inefficiencies and complications inherent in economic networks and apps.
So far, many Layer 1 (L1) blockchains provide smart contracts which enable developers to create dApps for various projects. One thing that’s missing, though, is privacy. Privacy in smart contracts can be achieved either on the hardware level, by CPUs that can compute securely in their enclaves and obfuscate data, or on the software level, by technologies like Zero-knowledge (ZK) proofs. These can hide users’ wallet balances and transactions, offering anonymity and confidentiality.
Let’s take, for example, BlackRock, which has $9 trillion worth of assets under management (AUM), and let’s assume that they decide to enter the crypto DeFi space. Everyone would be able to see their wallets, their balances, and the assets they invest in, when they buy and when they sell. Having their info exposed would make them vulnerable and allow potential bad actors or market manipulators to buy and sell assets according to their moves. As we know, when a prominent institution enters the crypto space, the prices of the assets that it invests in or talks about have the potential to skyrocket. With Sienna Network, no one can see the balances and transfers of users. It creates an inviting and open — let’s say castle gate — through which big institutional players and entities with large amounts of $$ can enter crypto securely, knowing that third parties or other network participants won’t spy upon their moves.
The privacy of Secret Network
Sienna is a DeFi project built on the blockchain of Secret Network. It offers financial services like borrowing, lending, and swaps with the benefit of privacy. Secret Network’s validators run secure Intel SGX CPU enclaves that anonymize transactional data like transfers and balances, ensuring anonymity and confidentiality. As you can understand, privacy in economic networks can benefit financial services and DeFi dApps in many ways. For example, users will be able to deposit/supply a vast array of assets like SCRT, sBTC, sATOM, and sXMR to earn yield or use them as collateral value to borrow up to 80% of their capital.
All this is possible thanks to Secret Network’s technology, which for the most part is powered by the Cosmos tech stack: the Tendermint PoS consensus protocol, the Cosmos SDK, and CosmWasm smart contracts. SCRT adds to all that the Intel SGX enclaves, which provides computational privacy. It can be complex to develop code for these CPUs to run smart contracts, but the Secret team has done an excellent job at delivering fast and efficiently. It’s important to note that the execution of processes performed by the SGX CPUs can be computationally heavy and resource-demanding, which could cause the fees to go up and speed get reduced because of clogging of the network.
Secret has addressed these problems and has eliminated most of them by improving the code, the network capacity, and infrastructure by pushing major upgrades like Supernova and Shockwave. So, by June of 2022, when Sienna will have released most of its features, network capacity and speed should be sufficient to enable the dApps to run smoothly.
Scalability and mass adoption ☄️
SCRT Labs Upgrade: Scaling Secret
The latest SCRT Labs update introduces four significant scaling improvements and upcoming initiatives designed to improve the experience for users and validators on Secret drastically.
The Secret team recently implemented four immediate improvements with positive results during high-traffic events:
- Query nodes optimization
- Improved Infrastructure for Keplr
- On-chain proposals to better control block times
- Adjustment of gas prices in Keplr
Shockwave: The Next Phase Of Secret Network’s Explosive Growth
After a Supernova comes an expanding Shockwave through the cosmos that will trigger the formation of new stars in the Secret ecosystem. Shockwave comprises multiple initiatives to drive Secret’s global growth adding hundreds of thousands more users and new projects.
Sienna Features
Sienna Network is an array of interconnected privacy-preserving DeFi applications utilizing the SIENNA token. These applications include SiennaSwap, SiennaLend, and SiennaLaunch:
1. SiennaSwap — Decentralized AMM DEX
SiennaSwap — enables users to trade SNIP-20 tokens of Secret like sSCRT, SIENNA, SHD, sXMR, sETH, and sATOM, which are all privacy-enabled. In addition, users can add liquidity in LP pairs in its farming pools and receive SIENNA token rewards in return. There’s also an LP pair between the SCRT token and its liquid staking version, stkd-SCRT. Shade Protocol develops that.
2. SiennaLend — DeFi services like Lending & Borrowing
SiennaLend — is a private cross-chain lending protocol for the Secret Network, Cosmos IBC-enabled tokens, and tokens of heterogeneous blockchains like Monero and Bitcoin. Its model uses variable interest returns for assets provided in its liquidity lending pools and over-collateralized loans for users that want to use their liquidity as collateral to borrow from the protocol.
Users can choose their desired percentage of LPs to use as collateral and borrow up to 80% of their value while also earning yield on the liquidity of those supplied underlying assets. In addition, there will be a dashboard for managing liquidations and a guide for setting up liquidator bots in the future.
Besides the benefit of obfuscating users’ interactions with DeFi protocols, many dangers get prevented by enabling privacy to the application layer. These dangers include manipulating market conditions by bad actors to cause liquidations and unfavorable funding rates.
The volume on SiennaLend isn’t too high currently. However, the team is working on mechanisms, improvements, and outreach initiatives to increase the platform’s number of users, volume, and liquidity.
3. SiennaLaunch — Launchpad
SiennaLaunch — is a launchpad on Sienna Network that offers services for new projects that want to generate and market their tokens or perform an Initial DEX Offering (IDO). Tokens created on the Sienna Launchpad will automatically be listed on SiennaSwap.
The cross-chain element of DeFi Privacy
Projects, ecosystems, and networks that interoperate with Sienna:
- SCRT bridges with ETH, BSC, XMR
- Cosmos IBC chains
- Cosmos <> Polkadot bridge by Astar
- sBTC on Secret by Shinobi
- ETH & ERC20s by Gravity Bridge, Axelar, Nomad, and other bridges.
Value Growth — Sienna Potential
When Sienna launched in the summer of 2021, its private sale price was $5 and $6 for its public sale. It had a run-up to $50, but it later dropped to $5 and is currently trading at $1.5. This is primarily because the AMM DEX launched first, and then it took many months until now for its privacy-enabled AAVE-like main product, SiennaLend, to launch. Also, the Secret ecosystem is still growing, getting more users each day. If SCRT continues its successful course, Sienna will be one of the prominent projects in its ecosystem to thrive.
It seems that there is some selling pressure from holders and private sale buyers, even though the token is currently trading below its sale price. There’s also probably some selling pressure from the team because the tokens are unlocked daily, and there are also the platform liquidity-provision LP rewards.
Some growth potential for Sienna Network products:
SiennaLend:
- Growth in TVL, integration of the SILK privacy stablecoin by Shade.
- Sienna token being able to be used as collateral will add utility.
- This dApp could bring more volume to the SiennaSwap AMM DEX and to Secret Tokens like sATOM and sXMR.
Sienna Launchpad
- IDOs will bring more attention and more people to the community.
More transactions, more volume, more $SIENNA burns.
Governance
SiennaDAO is the governance framework of Sienna Network and operates similarly to the Cosmos chains governance system. It will serve as the foundation for the future direction of Sienna through voting on proposals by the SIENNA token holders.
It will bolster the decentralization of the network as each token acts as one vote, and the higher the voting power a user has, the more influence he has on decision making. In addition, the votes will be anonymous through Secret’s private smart contracts, ensuring integrity without peer influence and reducing corruption.
Tokenomics
SIENNA controls the platform and its privacy-focused DeFi dApps. Over time, this governance token is earned by using the Sienna platform, creating a fair distribution for a perfect decentralized future, where SIENNA token holders decide over the entire protocol.
Team / Advisors / Contributors
The privacy-focused software development, design, and tech advisory company Senius AG supports Sienna. You can see more contributors here.
Some notable advisors are:
Backers
Closing Thoughts
As Secret Network grows, Sienna will be capturing more volume, and the number of users in its dApps will keep increasing. The bet here is on privacy-enabled DeFi. I’ve been a big supporter of Secret Network since 2020, and I’ve been part of the communities of its ecosystem projects since their creation, projects like Sienna Network and Shade Protocol.
In investing, my focus is always on high-quality projects that show promising potential for growth in value during an extended timeframe. The best is to buy as early and low as possible and hold. It’s also good to lock some profit on the way up. Since SCRT joined the Cosmos ecosystem in 2020 and enabled cross-chain privacy smart contracts, its price has increased by 3,000–5,000%. SiennaLend’s launch brings Sienna to its more mature stage, where its DeFi services can start to expand and gain mass adoption.
I’m bullish on privacy cross-chain smart contracts DeFi in 2022 and beyond.️
🔗 Sienna Network Links
Website: sienna.network
Telegram: t.me/GoSiennaNetwork
Twitter: twitter.com/sienna_network
Join my free Telegram to stay updated with the latest news from Sienna and other crypto projects: t.me/AkatsukiCryptoFA
Follow me on Twitter: https://twitter.com/NagatoDharma
