Phala Network, the AI-focused decentralized cloud computing project, is making a strategic leap from Polkadot to an Ethereum layer-2 network, aiming to tap into Ethereum’s robust ecosystem for confidential AI and GPU compute services.
The migration proposal passed this week, and Phala has announced that the transition will begin before November 20, 2025. Tokenholders of $PHA will receive new ERC-20 tokens at a 1:1 ratio, with staking, governance, and rewards continuing seamlessly on the Ethereum L2.
Why Ethereum L2?
Phala first launched a functional Ethereum L2 in January but maintained its Polkadot parachain presence until now. The move to fully commit to Ethereum is designed to:
- Reduce operational overhead by consolidating infrastructure
- Maximize growth potential through Ethereum’s liquidity and developer tooling
- Enable next-generation TDX and GPU confidential compute workloads with early commercial traction
According to proposal author doylegxd, renewing the Polkadot parachain slot would have locked Phala into infrastructure with limited scalability, requiring heavy maintenance. By moving to Ethereum L2, the project can scale efficiently while leveraging the broader Ethereum ecosystem, from DeFi to AI-integrated Web3 applications.
Phala’s AI and Cloud Computing Edge
Phala Network offers private, secure, and scalable computation tailored for AI-driven Web3 apps. Its move to Ethereum aligns with the company’s growth objectives, positioning it to capture opportunities at the intersection of artificial intelligence and blockchain technology.
Unlike some parachains like Astar and KILT Protocol, which pursue multi-chain expansion strategies, Phala is going all-in on Ethereum. The project sees full migration as critical to unlocking the full potential of its specialized technology.
$PHA Token and Market Position
$PHA currently ranks as the 11th-largest AI-agent crypto asset with a market cap of $80.6 million and sits among the top 50 AI-related tokens overall. The migration strategy aims to strengthen its market position while enabling developers and enterprise partners to leverage confidential compute capabilities more efficiently.
This move signals a broader trend of blockchain projects prioritizing scalability, interoperability, and ecosystem alignment over multi-chain fragmentation. For Phala, Ethereum isn’t just a new home—it’s a launchpad for the next phase of growth in AI-powered Web3 solutions.
