What is Phala Network (PHA)?

Deep Dive

1. Purpose & AI Execution Layer

Phala Network positions itself as the Execution Layer for Web3 AI (CoinMarketCap). Its primary goal is to solve the "AI execution problem" by enabling AI models and agents to understand and interact with blockchain smart contracts in a secure, private manner. This bridges a key gap, allowing complex AI logic to leverage on-chain data and triggers without compromising user privacy or model integrity.

2. Confidential Computing via TEE Technology

The network's distinctive feature is its use of Trusted Execution Environment (TEE) technology—secure, isolated areas in processors (like Intel SGX or TDX). Code running inside a TEE is cryptographically sealed, ensuring that data and AI model weights remain confidential even from the node operator. This hardware-level security allows Phala to offer a "confidential compute engine" for AI, providing verifiable privacy for tasks like model inference and private data processing (Phala).

3. Ecosystem Evolution & Ethereum L2 Focus

Originally a Polkadot parachain, Phala's community voted to sunset that infrastructure and fully migrate to an Ethereum Layer 2 solution, a transition completed in November 2025 (Phala). This strategic shift aims to tap into Ethereum's larger developer ecosystem, liquidity, and tooling to better serve enterprise demand for confidential AI and GPU compute. Its flagship product, Phala Cloud, offers deployable templates for private AI applications and provides GPU TEE instances for large language model (LLM) inference.

Conclusion

Phala Network fundamentally is a privacy-first cloud infrastructure that leverages trusted hardware to make AI computation verifiably confidential and compatible with blockchain ecosystems. As it settles into its new Ethereum L2 home, a key question is how broadly developers will adopt its unique trust model to build the next generation of private, intelligent Web3 applications.