Phala Network approves full migration from Polkadot to Ethereum Layer 2

AI-based Phala Network is preparing to migrate entirely from Polkadot to its Ethereum Layer 2 after its community voted decisively in favor of the move. 

According to forum notes published by Phala Network Ecosystem leader doylegxd, the Ethereum L2 migration will see PHA token holders receive vPHA (ERC-20) at a 1:1 ratio. 

Migration will begin before November 20, coinciding with the expiration of Phala’s parachain slot on Polkadot. Staking, rewards, and governance are all expected to continue immediately after the transition.

Phala moves on from Polkadot

Phala Network was among the first projects to secure a Polkadot parachain slot during the 2021 auctions, aiming to build a decentralized cloud computing platform for private, scalable computation and AI-powered Web3 applications.

The network currently operates on Intel SGX, a hardware-based security technology. However, Intel has been investing more towards Intel TDX and GPU confidential computing, leaving SGX only for existing deployments. It leaves Phala with a dwindling support base that has limited the long-term viability for SGX miners.

According to the doylegxd, SGX-based miners require continued investment because their technology is fading. Still, the network’s delegation is stable at about 65 million PHA, supported by roughly 29,000 active miners.

“Keeping it alive would consume significant resources while locking us into an infrastructure with limited scalability,” the ecosystem lead wrote.

The Layer 2 network is already operational, featuring an integrated explorer at explorer.phala.network for transparent activity tracking, and a bridge at bridge.phala.network with smooth PHA transfers between Ethereum and the L2.

“Phala L2 will serve as the execution layer for GPU and TDX confidential compute, while staking and governance remain secured on Ethereum L1,” the proposal read. 

Proposal outlines migration plan timeline

Phala’s community voting and communication on migration began on September 26 and was scheduled to run through October 15, although the majority being in favor of switching networks has closed the vote early. 

Development and exchange preparation will commence immediately after the voting period ends and will continue up to November 20. During this time, the team is finalizing the Ethereum Layer 1 staking contract, completing the vPHA issuance logic, and building a claim interface within the Phala App.

Doylegxd mentioned security audits and internal testing to determine the safety of migration contracts and tools are ongoing. Phala is also concurrently coordinating with exchanges like Gate.io to disable Polkadot parachain deposits and withdrawals, handing over operations to the Ethereum L2 infrastructure.

Collators, gatekeepers, and other parachain components will be deactivated on Polkadot, and Phala’s development team will freeze assets until the next phase opens.

Between November 20 and November 25, Phala’s Layer 2 will officially become the new network for staking, governance, and confidential compute operations. PHA tokens staked on Ethereum Layer 1 will convert to vPHA, the functional token of the ecosystem. 

Users can claim parachain assets through the Phala App, while existing delegations will automatically map to the new staking system. Any unclaimed assets from previous deployments will also be recoverable through the same interface.

Governance migration is planned between November 26 and November 30, with all treasury and voting activities moving to Ethereum Layer 1. Governance will use snapshot voting and safe multisig for security, while vPHA becomes the governance utility token.

After November 30, the project will shift its focus toward long-term development. GPU miners will begin operating directly on the Layer 2, earning rewards in vPHA. 

The L1 staking contract will maintain a dynamic exchange rate between PHA and vPHA, ensuring that all tokens are redeemable. 

While the migration proposal was broadly supported, some contributors have questioned whether the change to Layer 2 is safe for the ecosystem at large.

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