AI-focused blockchain project Phala votes to move entirely to Ethereum, citing scalability, liquidity, and enterprise compute growth.
The AI-powered Polkadot parachain Phala Network has voted to fully migrate its operations to an Ethereum Layer 2 (L2), marking a significant turning point for one of Web3’s earliest decentralized compute networks. The community-backed proposal aims to position Phala as a leading player in confidential AI and GPU-based computation within the Ethereum ecosystem.
“Proposal Passed: Phala is Migrating to Ethereum L2!” the project announced on X, calling it the next step toward “greater scalability and enterprise-grade security.”
The official governance vote, which passed earlier this week, confirmed that the Phala (PHA) token will be redeployed as an ERC-20 asset at a 1:1 ratio. The migration process is expected to begin before November 20, ensuring continuity for staking, rewards, and governance features.
Founded as a Polkadot parachain in 2021, Phala was designed to offer private, secure, and scalable computation for AI-integrated Web3 applications. However, as explained in the proposal, renewing the Polkadot slot would lock the project into limited infrastructure and high operational costs.
“L2 offers lower overhead and direct access to Ethereum liquidity and tooling,” noted Phala ecosystem lead doylegxd in the governance forum. “It’s the natural environment for deploying TDX and GPU-based confidential compute workloads, where we already see early commercial traction.”
The project’s Ethereum Layer 2 network, already live since January 2025, will now serve as the central hub for all Phala activities — consolidating staking, governance, and confidential compute operations under one scalable framework.
This move sets Phala apart from other Polkadot-linked projects such as Astar and KILT Protocol, which chose a multichain integration strategy instead of full migration.
Industry observers view the decision as a calculated bet on Ethereum’s network effects and developer tooling. “Phala’s transition reflects the growing recognition that AI workloads demand both scalability and liquidity — two areas where Ethereum continues to dominate,” said one blockchain researcher.
With a market capitalization of $80.6 million, Phala ranks among the top 50 AI-related crypto assets, signaling continued investor interest as it embraces the Ethereum ecosystem for its next phase of growth.
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