Polkadot parachain Phala network launches Ethereum layer-2 network

Polkadot-based parachain Phala has launched its Ethereum layer-2 network to expand its reach. The move continues the trend of new rollup networks on Ethereum and marks an advancement in rollup infrastructure.

According to its announcement, Phala collaborated with zero-knowledge (ZK) proofs infrastructure provider Succinct Labs and rollup-as-a-service platform Conduit on the launch. Through the partnership, the firms launched the first-ever OP Succinct Layer 2 on Ethereum.

The team claims that its L2 is different from the existing rollup networks because it combines optimistic and ZK-proof technology. It said it achieved this feat by integrating ZK proofs into the roll-up built with an OP Stack. With this, the new L2 now has a fast finality as ZK proofs replace the 7-day fraud window of Optimistic rollups while also enjoying more security due to the fault tolerance of OP with the cryptographic standards of ZK proofs.

Phala Network explained that having an Ethereum L2, which it describes as Phala 2.0, gives it a chance to offer its services on the largest smart contract network. It noted a significant demand for its services on Ethereum-based infrastructure, and how the network will now give users easier access to its products.

It said:

“Phala Network’s move to Ethereum signifies a bold shift to deliver its cryptographic computing solutions on the largest smart contract platform.”

Phala Network is a Polkadot parachain that provides Trusted Execution Environments (TEEs) for developers to deploy confidential smart contracts and decentralized applications (dApps). The network is an execution layer for decentralized computing and AI projects, hosting several crypto AI apps, including ai16z Eliza TEE.

Phala phases out Khala network 

With the launch of its Ethereum L2, Phala also announced that it would shut down its Kusama-based parachain, Khala Network by January 10 at 20:00 UTC. Khala’s shutdown is largely due to Intel’s decision to discontinue its SGX-IAS support by April 2025, making Khala workers obsolete.

The discontinuance also coincides with the expiry of the Khala parachain slot on Kusama. In order to ensure a seamless transition, the network has warned users not to initiate any on-chain transactions during the period as they could lose their PHA assets.

All assets on Khala will now be moved to ERC20, with the network taking a snapshot after discontinuing the chain. Starting on January 12, users will be able to claim their assets manually through the Phala app.

PHA is currently down 7% after a market-wide crash that dropped Bitcoin to $93,000. The token is trading at $0.3062, representing a sizable decline of 14.75% this year even as it maintains a positive 77% increase in the last 30 days.

More Ethereum L2s emerge 

Meanwhile, the launch of Phala L2 continues the growth of the Ethereum L2 ecosystem, which saw massive growth last year. The network now has over 100 L2s, a 300% increase compared to 2023. More L2s, including one from the leading decentralized exchange Uniswap, will likely come during the year.

Despite criticisms that these L2s cannibalized Ethereum in 2024, they have been responsible for most of the network’s growth. Many stakeholders also believe that the Ethereum rollup-centric scaling roadmap is good for blockchain adoption as a whole, as it makes on-chain transactions more accessible.

Across Protocol co-founder Hart Lambur said:

“A year ago L2 transactions were a few bucks. Now they are pennies. And L2s allow for practically infinite scalability.”

Nevertheless, Ethereum is also regaining most of the transaction volume that it lost to L2 earlier, showing that the mainnet can continue to thrive even as L2s gain a foothold.

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