Phala is migrating its network from Polkadot to an Ethereum layer 2 (L2) to consolidate confidential AI and GPU compute, improve scalability, and convert PHA tokens to an ERC‑20 at a 1:1 ratio before Nov. 20, while preserving staking, rewards, and governance on the new L2.
Full migration to Ethereum L2 announced: PHA → ERC‑20 1:1
Migration begins before Nov. 20; staking and governance continue on L2
Move aims to prioritize confidential AI and GPU compute, reducing operational overhead
Meta description: Phala migration to Ethereum L2 announced; PHA to ERC‑20 1:1, staking and governance preserved. Learn migration timeline and what tokenholders should do.
AI-focused Polkadot project Phala is set to fully migrate to its Ethereum L2, betting on its ecosystem for confidential AI and GPU compute growth.
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 clients.
“Proposal Passed: Phala is Migrating to Ethereum L2!” a 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).
Phala announces key changes to its community. Source: Phala
What is Phala’s migration to Ethereum L2?
Phala’s migration to an Ethereum L2 is a community-approved move to transfer the network’s operations and token standard from Polkadot to an Ethereum Virtual Machine-aligned layer 2. The shift intends to host confidential AI and GPU compute workloads while maintaining staking and governance functions.
How will the PHA token migration work?
Tokenholders will receive a new ERC‑20 PHA at a 1:1 ratio. The migration window begins before Nov. 20 and is designed for a seamless conversion that preserves staking, rewards distribution, and governance participation on the new L2. Exact technical steps and snapshot details were outlined in the proposal by the Phala ecosystem lead.
Why is Phala moving from Polkadot to Ethereum L2?
Phala’s proposal cites limited scalability and high renewal costs for Polkadot parachain slots. Moving to an Ethereum L2 offers direct access to Ethereum liquidity and tooling, lower operational overhead, and alignment with next‑generation confidential compute and GPU workloads that have shown early commercial traction.
How does the migration affect enterprise confidential compute?
By consolidating on an Ethereum L2, Phala expects to scale confidential AI and GPU compute more efficiently. L2 environments simplify integration with Ethereum-native developer tools, and the proposal highlights emerging demand for TDX and GPU-based confidential compute from enterprise clients.
When will the migration start and what are the key dates?
The community-approved migration is set to start before Nov. 20. The proposal was submitted on Sept. 27 and the announcement followed the community vote. Token distribution mechanics, staking continuity, and governance transition steps were confirmed in the proposal text.
Comparison: Polkadot parachain vs Ethereum L2 for Phala
| Criteria | Polkadot Parachain | Ethereum L2 |
|---|---|---|
| Scalability | Constrained by parachain slot and relay-chain resources | Higher horizontal scaling potential via L2 rollups |
| Liquidity & Tooling | Polkadot ecosystem tools and liquidity | Direct access to Ethereum liquidity and broad developer tooling |
| Operational Overhead | Higher due to slot renewal and maintenance | Lower; easier integration with existing infrastructure |
| Confidential Compute | Supported but limited ecosystem for enterprise integration | Positions Phala for GPU and TDX workloads with better market fit |
Frequently Asked Questions
Will staking and governance continue after migration?
Yes. The project announced that staking, rewards, and governance will continue seamlessly on the Ethereum L2, with tokenholders receiving ERC‑20 tokens at a 1:1 swap to preserve participation rights.
Do tokenholders need to take action for the PHA swap?
Phala’s proposal indicates an automated 1:1 conversion to ERC‑20. Tokenholders should follow official Phala communications for any required wallet or exchange steps and timeline updates.
How does this affect Phala’s position in the AI token market?
Phala is listed among leading AI-agent-related crypto assets by market capitalization and expects the L2 migration to enhance enterprise adoption of confidential compute, potentially supporting longer-term growth.
Key Takeaways
- Migration confirmed: Phala will move from a Polkadot parachain to an Ethereum L2 to prioritize confidential AI and GPU compute.
- Token swap: PHA holders will receive ERC‑20 tokens at a 1:1 ratio before Nov. 20; staking and governance preserved.
- Enterprise focus: L2 gives Phala lower overhead and improved access to Ethereum liquidity, tooling, and enterprise compute demand.
Conclusion
Phala’s decision to migrate to an Ethereum L2 reflects a strategic shift to support confidential AI and GPU workloads with greater scalability and lower operational overhead. Tokenholders should monitor official Phala communications and be ready for the ERC‑20 swap. COINOTAG will continue to report updates as the migration progresses.