Ethereum

Phala Network

Polkadot

Polkadot parachain Phala is set to become an Ethereum layer 2 after the community voted in favor of a recent proposal aimed at ramping computation offerings to enterprise client.
“Proposal Passed: Phala is Migrating to Ethereum L2!” a&nbsp;Phala X post from Wednesday reads, adding that it marks the next chapter for the project as it pushes for “greater scalability and enterprise-grade security.”
The post adds that Phala (PHA) tokenholders will receive the new ERC-20 variant at a 1:1 ratio, the “migration” will start before Nov. 20, and that “staking, rewards, and governance” will continue seamlessly on the new layer 2 (L2).
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 <img alt="AI Polkadot parachain Phala votes to fully switch to Ethereum L2" src="https://s3.cointelegraph.com/uploads/2025-10/0199cc7b-9b96-717f-8c25-d5c2ee345df2" title="">
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 Phala announces key changes to its community. Source: <a href="https://x.com/PhalaNetwork/status/1975905695259414735" rel="noopener noreferrer nofollow" target="_blank">Phala</a>
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This isn’t an abrupt move by Phala, as it already has a “live and functional” Ethereum L2 that was launched in January. As the proposal explains, the project aims to fully migrate and focus solely on Ethereum to maximize potential upside.&nbsp;
Phala is a decentralized cloud computing network that is designed to provide private, secure and scalable computation for AI-integrated Web3 applications. It was one of the first projects to secure a parachain slot as part of the <a href="https://cointelegraph.com/news/polkadot-to-debut-parachain-auctions-after-governance-vote" rel="noopener noreferrer nofollow">auctions held by Polkadot</a> in late 2021.&nbsp;
The proposal was initially <a href="https://forum.phala.network/t/proposal-sunsetting-phala-parachain-and-migrating-to-ethereum-l2/3999" rel="noopener noreferrer nofollow" target="_blank">submitted</a> on Sept. 27, with the leader of Phala Network ecosystem success “doylegxd,” recommending the move to consolidate staking, governance and confidential compute in a “stronger” <a href="https://cointelegraph.com/news/rwa-friendly-l1-blockchain-adds-native-evm-and-cosmwasm-with-protocol-level-compliance" rel="noopener noreferrer nofollow">Ethereum Virtual Machine-aligned</a> ecosystem.&nbsp;
Related: <a href="https://cointelegraph.com/news/polkadot-dao-approves-2-1b-hard-cap-dot-supply" rel="noopener noreferrer nofollow">Polkadot DAO approves 2.1B token cap on DOT supply in tokenomics shift</a>
The proposal also argued that renewing the <a href="https://cointelegraph.com/learn/articles/what-are-parachains-polkadot-and-kusama-parachains" rel="noopener noreferrer nofollow">parachain</a> slot on Polkadot would lock the project into “infrastructure with limited scalability” that would require significant resources to maintain. While working in Ethereum would also enable it to utilize next-gen computation tech.&nbsp;
“L2 offers lower operational overhead and direct integration with Ethereum liquidity and tooling. It is also the natural home for deploying TDX and GPU-based confidential compute workloads, where we already see early-stage commercial traction,” the proposal reads.&nbsp;
<h2 id="strong-why-migrate-from-polkadot-strong">Why migrate from Polkadot? </h2>
Phala appears to be one of the few that have decided to completely move <a href="https://cointelegraph.com/news/polkadot-weighs-native-dot-backed-algorithmic-stablecoin" rel="noopener noreferrer nofollow">from Polkadot</a> to Ethereum.
Other projects, such <a href="https://cointelegraph.com/news/canto-and-astar-blockchains-plan-migration-to-ethereum-ecoystem" rel="noopener noreferrer nofollow">as Astar</a> and the KILT Protocol, <a href="https://medium.com/kilt-protocol/expanding-horizons-kilt-tokens-first-move-towards-multi-chain-with-ethereum-1ff2f5606fb1" rel="noopener noreferrer nofollow" target="_blank">opted</a> to expand their integration to Ethereum in a multichain approach instead of abandoning Polkadot. Phala’s proposal suggests the move was aimed at capitalizing very niche tech that it needs to spur further growth.&nbsp;
The PHALA token is the 11th largest AI-agent-related crypto-asset by market capitalization at $80.6 million and is among the top 50 largest AI tokens by market cap, according to <a href="https://www.coingecko.com/en/categories/artificial-intelligence" rel="noopener noreferrer nofollow" target="_blank">data</a> from CoinGecko.
Magazine: <a href="https://cointelegraph.com/magazine/ethereum-polkadot-founder-gavin-wood-vitalik-buterin-parity-technologies/" rel="noopener noreferrer nofollow">Meet the Ethereum and Polkadot co-founder who wasn’t in Time Magazine</a>

AI Polkadot parachain Phala votes to fully switch to Ethereum L2

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