Ethereum News Today: Phala's Ethereum L2 Move Powers Confidential AI and GPU Compute

Phala Network, an AI-focused decentralized cloud computing platform, has confirmed its community vote to migrate fully from the Polkadot parachain to an Ethereum Layer 2 (L2) solution. The decision, announced via a Phala X post on October 8, 2025, marks a strategic pivot to leverage Ethereum's scalability, liquidity, and enterprise-grade infrastructure for confidential AI and GPU compute workloads. Tokenholders will receive a 1:1 conversion of PHA to ERC-20 tokens before November 20, 2025, with staking, rewards, and governance functions continuing seamlessly on the new L2. The migration, which began in January 2025 with a live Ethereum L2 deployment, aims to consolidate operations and align with Ethereum Virtual Machine (EVM) standards to enhance commercial viability.

The proposal, submitted on September 27, 2025, highlighted that maintaining a Polkadot parachain slot would limit scalability and require significant operational resources. Phala's team emphasized that Ethereum L2 offers lower overhead, direct access to Ethereum's liquidity and developer tools, and a natural environment for deploying Intel TDX and GPU-based confidential compute workloads. The project's existing Polkadot parachain slot, set to expire in November 2025, will be retired, with Phala's infrastructure transitioning to Ethereum L2 to focus on next-generation technologies like TDX and GPU acceleration, which Intel has prioritized for enterprise adoption.

Phala's migration distinguishes it from projects like Astar and KILT Protocol, which adopted a multichain strategy to expand Ethereum integration while retaining Polkadot ties. By fully pivoting to Ethereum, Phala seeks to capitalize on its niche in confidential computing, where early commercial traction has already been observed. The PHA token, currently the 11th largest AI-related crypto asset by market capitalization ($80.6 million), is expected to benefit from Ethereum's broader ecosystem and liquidity, potentially driving enterprise adoption and long-term growth.

The migration timeline includes a phased transition of infrastructure, with asset claims and staking continuity managed through the Phala App. Users will retain governance rights via vPHA, a derivative token representing staked PHA on Ethereum L1. Exchanges like Gate.io will phase out support for Phala's Polkadot parachain deposits, aligning with the L2 integration. Post-migration, Phala will operate a dual-layer architecture: Ethereum L1 for governance and staking, and L2 for compute workloads, ensuring scalability without compromising security.

Phala's move reflects broader trends in the blockchain industry, where projects increasingly prioritize Ethereum L2s for scalability and enterprise integration. The decision aligns with Intel's roadmap, which prioritizes TDX and GPU-based solutions over older SGX technology. By positioning itself at the intersection of AI, confidential computing, and Ethereum's enterprise ecosystem, Phala aims to address growing demand for secure, scalable computation in Web3 applications.

Source: [1] Cointelegraph (https://cointelegraph.com/news/polkadot-parachain-phala-votes-switch-ethereum-l2) [2] Phala Forum (https://forum.phala.network/t/proposal-sunsetting-phala-parachain-and-migrating-to-ethereum-l2/3999) [3] Bitnewsbot (https://bitnewsbot.com/phala-to-migrate-from-polkadot-to/) [4] Phemex (https://phemex.com/news/article/phala-network-to-transition-from-polkadot-to-ethereum-l2-22515) [5] TradingView (https://www.tradingview.com/news/coinmarketcal:16154585e094b:0-phala-pha-pha-to-vpha-migration-19-nov-2025/)