- Phala community approved the migration from Polkadot to become an Ethereum Layer 2.
- Migration begins before November 20, with PHA tokenholders receiving new ERC-20 tokens at a 1:1 rate.
- Staking, rewards, and governance features will continue without interruption on Ethereum Layer 2.
- The move aims to access greater scalability, enterprise security, and next-generation computing technology.
- Phala is one of few projects fully leaving Polkadot, while others choose a multichain approach.
Phala, a decentralized cloud computing network, will transition from the Polkadot network to function as an Ethereum Layer 2 solution after receiving approval from its community. The migration is set to start before November 20 and is designed to boost scalability and enhance enterprise-level security for its platform.
Following the migration, PHA tokenholders will be able to exchange their current tokens for a new ERC-20 version on a one-to-one basis, according to an announcement posted by Phala on X (formerly Twitter) on Wednesday. The project confirmed, “staking, rewards, and governance will continue seamlessly on the new layer 2 (L2)”.
Phala has already deployed a live Ethereum Layer 2 solution, which was launched in January. The proposal suggests a full shift of focus to Ethereum, describing it as a move to maximize future growth opportunities. The proposal, submitted on September 27, emphasized that aligning with the Ethereum Virtual Machine—a widely adopted blockchain computing platform—would consolidate operations and allow for more advanced confidential computing.
The proposal also explained that renewing its parachain slot on Polkadot could limit scalability and require significant resources to maintain. Instead, migrating to Ethereum Layer 2 would enable direct integration with Ethereum’s liquidity and developer tools. The team highlighted, “L2 offers lower operational overhead and direct integration with Ethereum liquidity and tooling. It is also the natural home for deploying TDX and GPU-based confidential compute workloads, where we already see early-stage commercial traction.”
Phala was one of the first projects to win a parachain slot on Polkadot in late 2021. The network specializes in providing private and secure cloud computing for AI-enabled Web3 applications. According to data from CoinGecko, the PHA token holds a market capitalization of about $80.6 million, ranking it among the top 50 AI-related crypto assets.
Unlike Phala, other projects such as Astar and KILT Protocol have chosen to expand to Ethereum while maintaining their Polkadot presence, following a multichain strategy. Phala’s migration strategy is tailored to its specialized focus on confidential computing to accelerate its development and adoption. For more information on the migration proposal, visit the Phala Network forum.
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