Phala Network to Fully Transition from Polkadot to Ethereum Layer 2 Following Community Vote

Phala Network, a Polkadot parachain and a decentralized cloud computing platform, will migrate to the Ethereum Layer 2 (L2) network after a community vote. The project will be transformed into a fully dedicated L2 network. The proposal was titled ‘Phala is Migrating to Ethereum L2!' and was passed earlier this week. This marks a significant shift for the project and its aim to enhance security, enterprise adoption, and scalability.

The migration process will begin before November 20. All PHA token holders will receive an equivalent ERC-20 token at a 1:1 ratio. All core functionals, such as governance, rewards, and staking, will resume uninterrupted on the L2 network.

Phala Network to Migrate to Ethereum Layer 2 Network

Phala’s transition is not an abrupt departure; the team launched a live and functional Ethereum L2 back in January. The proposal’s author, known as “doylegxd,” who leads ecosystem success at Phala, argued that consolidating efforts on Ethereum aligns better with the project’s confidential compute and AI-focused goals.

“L2 offers lower operational overhead and direct integration with Ethereum liquidity and tooling,” the proposal stated, adding that it provides a natural home for deploying GPU-based confidential compute workloads and TDX-based AI applications, areas where Phala is seeing early commercial traction.

Founded as one of the first Polkadot parachains during the 2021 auction rounds, Phala built its reputation on providing secure and privacy-preserving computation for Web3 and AI applications. The team cited Polkadot’s high maintenance demands and “limited scalability” as the main reason for the move.

Projects such as KILT Protocol and Astar have also migrated to Ethereum while using the multichain approach. However, Phala Network is one of the few to fully migrate away from Polkadot. This shows a significant confidence in Ethereum’s evolving L2 ecosystem. According to CoinGecko, the PHA token ranks as the 11th-largest AI-related crypto asset, with a market capitalization of around $80.6 million, placing it among the top 50 AI tokens globally.