What is Phala Network? Privacy-Enhanced Permissionless Computing Protocol

What is Phala Network? Phala Network is a privacy-enhanced permissionless computing protocol that enables anyone to build decentralized applications on top of it. Phala Network is based on the Polkadot network and uses Parachain technology, which allows for greater scalability and privacy. In this article, we will take a deep dive into Phala Network and describe how it works as well as its governance model.

The Phala Network is a decentralized cloud computing protocol that aims to compete with existing cloud services such as Amazon AWS or Google Cloud.

What is Phala Network?

Cloud computing is the process of maintaining huge, online data warehouses that provide computing resources, such as data storage and processing power, to end users. With Phala’s network, unused capacity from everyday computers may be used to generate a more distributed approach to cloud computing and storage while also providing a more decentralized answer for those in need of large-scale computing resources.

Phila’s goal is to provide these services through a decentralized, worldwide network of computing resources that can scale for performance while also optimizing for privacy and security.

Phala employs two types of “worker node” participants to power the network.

The Gatekeepers are the first set of nodes. Gatekeeper nodes manage interactions between Phala network users as well as connections with other blockchains. The function of gatekeepers is to maintain the blockchain’s current state and consensus rules.

The second group are the Minder nodes. Miner nodes operate a CPU network and serve various computational functions by renting out their computing resources to the network.

Phala ensures processing power is highly scalable but not wasteful by separating the consensus mechanism from the calculation. This creates the foundation for a powerful, secure, and scalable trustless computing cloud that is both scalable and energy efficient.

This blockchain is a trustless computation platform that enables massive cloud processing without sacrificing data confidentiality. Phala will be able to provide computing power to other blockchain applications while protecting the data layer, developing light-node cross-chain bridges, enabling possibilities like privacy-protected DeFi trading positions and transaction history, co-computing DID confidential data and more.

What is Khala Network?

Khala Network is the sister network of Phala Network in the Kusama ecosystem. Khala is also called the canary network of Phala. The idea of Khala Network, similar to all Kusama parachains is to allow the projects to test new innovative ideas in a real economic environment before deploying them on the main Polkadot Parachain.

Although sometimes, Kusama parachains, such as Khala are called testnets, that term might be a bit misleading, because Kusama is a real economic environment like Polkadot. A more appropriate term might be that Kusama is the innovation hub of Polkadot. Similarly, Khala is the innovation hub of Phala.

History of Phala Network

Phala was established in 2018 by the Phala Network Foundation, which is led by Hang Yin, a former Google Software Engineer who has also worked at Tencent and Alibaba.

The Phala Network Foundation has raised $1.68 million in two private token sales since 2019, with 15% of the initial token supply being given to investors. The project also received three Web3 Foundation grants.

The PHA crypto token was created as an Ethereum token in September 2020, and a Kusama token in 2021.

How does Phala Network Work?

Phala is a custom blockchain that, like a parachain, connects to the Polkadot main chain, known as the Relay Chain. The Relay Chain is in charge of Polkadot’s shared security, transaction settlements, and consensus. Phala gains access to Polkadot’s basic features through a connection to the Relay Chain.

Read: Polkadot: Blockchain Interoperability Platform.

Phala Network is based on a parachain technology that has been used by other projects. It will be simple to join the Phala Network to the other parachains in the Polkadot ecosystem, according to Phala. Participants of the network, who submit requests as transactions to the network and miner nodes, perform calculations to guarantee transaction validity and network integrity.

what is phala network - Gatekeepers
Phala Network Design (source: Phala Network)

To ensure confidentiality, the processing on a miner node’s CPUs is carried out within a Secure Enclave, commonly known as a Trusted Execution Environment (TEE). Even the owner of the mining machine cannot view or tamper with what is stored in these enclaves because they are encrypted.

The Phala gatekeeper nodes broker transactions between users and CPU Miners, ensuring securing and protecting the data layer. The information is decrypted and runs once it reaches the protected enclave. The results of this information request are then re-encrypted before being sent out of the enclave. Your sensitive data is only processed in hardware secure enclaves isolated from the rest of the world.

Any calculation performed on the platform, whether it be machine learning data for businesses or smart contract execution for DeFi applications, is confidential and adaptable across use cases, according to Phala.

Phala, for instance, built Web3 Analytics, a platform that captures and manages personal data in a secure manner. Only when authorized by the users can confidential smart contracts perform data analyses on this information, giving them total control over their own data.

Phala Products

Fat Contract

what is phala network - Fat Contract
Phala Network’s Fat Contract (source: Phala Network)

Fat Contracts, often called “fat contracts,” are a new programming approach that enables off-chain computation. The Fat Contract incorporates the self-enforcing and tamper-proof characteristics of smart contracts while also providing several benefits.

The first aspect is that it allows low-cost and zero-latency transactions because most user interactions do not involve on-chain activities. Second, it may handle highly complex computations as well as long-lived services without risking network congestion. Finally, it supports native HTTP request support to link multiple services together.

The Fat Contracts, Phala Network smart contracts, focus on giving Web3 backend function-level services and are meant to be used in conjunction with current smart contracts with their own unique capabilities.

The Fat Contract can be used in a wide range of applications. First, it allows for low-latency services such as GameFi or Metaverse backends.

Read: What is GameFi? How to earn from Play-to-Earn games.

Second, it enables computationally intensive apps like NFT rendering, machine learning, and big data analytics.

Read: What is an NFT? Non-Fungible tokens explained.

Other wonderful applications include privacy-preserving situations such As a decentralized exchange and others where privacy is essential. Finally, fat contracts may be utilized to power composite apps including Oracle, bots, and other Web2/Web3 service-bound applications.


what is phala network - SubbBridge
Phala Network’s SubBridge (source: Phala Network)

The SubBridge is a cross-chain router that bridges Dotsama and Ethereum, as well as other ecosystems’ assets. Instead of developing the cross-chain link itself, SubBridge is intended to connect existing bridging solutions and forward assets across multiple blockchains.

You may take advantage of all of SubBridge’s supported bridging technologies by using it. To send assets and information across chains, SubBridge is built on the “XCM + ChainBridge cross-chain protocol.”

Phala World

what is phala network - PhalaWorld
PhalaWorld (source: Phala Network)

A Metaverse Gamification Extension called Phala World (PW) is based on the Phala Network blockchain. The new “Gamifying the Meta-Soul” concept incorporates user behavior, characters, communities, and sci-fi tales on the Phala blockchain to deliver strategy, development, MMORPG, and other game types. To build NFT and Metaverse gaming infrastructure, Phala is working with RMRK and Bit. Country.

The goal of PhalaWorld is to connect the real activities on the Phala network chain with those in the Metaverse. PW is a game that was designed specifically for the community and utilizes community contributions to the Phala network as assets in the game. While playing, players may earn, trade, and construct items. This will be a major breakthrough for gaming and will pave the way for future innovation.

Meanwhile, Fat Contract is one of the most significant application examples of PW. On the one hand, it guarantees that PW is truly decentralized and trustless by using computing power and confidentiality. On the other hand, only Fat Contract has the capacity to handle big data storage and high-speed processing; connect AR and distributed storage solutions; offer low-latency responses for user requests, and really realize Web3 Metaverse’s goal.

Phala’s Pha token utility

The Phala Network’s native utility token is PHAR, which is used in the cloud-based economy. The PHA token, with a total supply of 1 billion PHA, aids in the security and maintenance of the network’s governance mechanism.

PHA allows anyone wanting to lease computing power, resources, and services to do so, whether it’s an external blockchain requiring extra resources or someone who wants to safely store data. Those who contribute resources toward the network’s protection may be compensated in PHA.

Staked PHA may also be utilized by gatekeepers and miner nodes to execute their obligations. Staking ensures that if they misbehave, their staked PHA will be reduced as punishment. Finally, anyone who has purchased PHA can become a stakeholder and vote on any proposed changes to the Phala network via on-chain governance.

Phala Network Governance

Phala Network adopts the same governance model as Polkadot. Phala Network governance is composed of three main entities: Referenda, Council, and Technical Committee.

To make any adjustments to the network, it’s vital to bring together active token holders and the council to vote on a network upgrade proposal. Whether it’s submitted by the general public (PHA token holders) or the council, it must go through a referendum in order for all stakeholders, weighted by stake, to have their say.


Referenda are simple, easy-to-use, and stake-based voting methods. Each referendum includes a specific on-chain proposal that is invoked as a privileged function call.

Referenda are discrete events with a limited period in which voting takes place, and then the result is tabulated and the function call is made if the vote passes. Referenda are always binary; you have just three options when it comes to voting: “aye,” “nay,” or “abstain.”

A referendum may be initiated in one of four ways: Proposed legislation that has been published and is available for public comment, Council proposals that have been approved by a majority or unanimously, Proposals submitted as part of the implementation of a prior referendum, and Emergency requests made by the Technical Committee and authorized by the Council.

The time between the conclusion of a referendum and, if the proposal was passed, its implementation is known as an enactment delay. This is the duration between the end of a referendum and when, if the proposition was accepted, the changes would take effect. This is a set period in both cases for both the first two methods of calling for a referendum. 7 days is how long it will take in Phala. It can be set as desired for the third method.


what is phala network - Council - phala network parachain - phala network polkadot
Phala Network’s Council (source: Phala Network)

The Phala Foundation introduces the concept of a “council” to represent passives. The council is an on-chain entity made up of numerous actors, each represented as an on-chain account. At present, the council comprises of five members on Phala. It’s expected that the number of seats in the council will rise to eleven in the near future. In general, there will be a certain number of seats reserved for the council.

The council is also called upon to fulfill a variety of obligations in addition to managing the treasury. The following are some of the most important: proposing well-considered referenda, overturning unquestionably harmful or disastrous referendum proposals, and choosing the technical committee.

A majority of the council’s members must be in favor, with no member having a veto. Only one time may a delegate veto any single proposal; if the idea is resubmitted after a cool-down period, they can’t reject it again.

A council motion that receives a 3/5 (60%) super-majority – but not unanimous support – will go to a public referendum under a neutral, majority-carries voting method. If all members of the council vote in favor of a proposal, the result is considered unanimous and it becomes a referendum with negative adaptive quorum bias.

Technical Committee

The Technical Committee was formed as one of the three chambers of Phala governance (along with the Council and Referendum chamber) in the Phala rollout and governance post. The Technical Committee is made up of teams that have successfully implemented or specified a Phala parachain or Host. Teams can be added or removed from the Technical Committee with a simple majority vote of the Council.

The Technical Committee can, in collaboration with the Council, produce emergency referenda that are accelerated for voting and implementation. These are utilized to implement new but battle-tested features into the Phala parachain’s code in a hurry.

Fast-tracked referenda are the only sort of referendums that can be in operation at the same time as another active referendum. As a result, two active referendums is possible with fast-tracked referenda because they allow for rapid voting. One does not invalidate or prevent a user from participating in another referendum held at the same time.


Phala Network is an innovative platform within the Polkadot ecosystem. Phala Network’s focus on privacy-preserving computation will enable a new class of decentralized applications to be built that were not possible before. The Phala Foundation is committed to building an open, decentralized future and is excited to see what the Phala community will build next.

Phala Network is definitely a project to keep an eye on in the coming months and years, as privacy is becoming more and more important nowadays.

Aris Ioannou
Aris Ioannouhttps://coinavalon.io
Aris created Coinavalon with the purpose of helping the average person navigate the decentralized web. Aris has been passively in the space since 2017 and full time since late 2020. Before Coinavalon, Aris worked as a Business & IT Architect in the financial services sector. Aris holds an MSc in Advanced Computing from Imperial College London, a BSc in Computer Engineering from University of Cyprus and currently pursuing an MBA degree from CIIM.

Related Articles

Latest Articles