What Is Phala Network? (PHA)

What Is Phala Network? (PHA)

By The Phala Network Team

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

Cloud computing refers to the maintenance of large, web-based data repositories that provide computing resources, such as data storage and computing power, for end users.  With the Phala network, excess capacity from everyday computers can be put to work while creating a more distributed approach to cloud computing and storage.

Phala aims to provide these services through a decentralized, global network of computing resources with the ability to scale for performance while also optimizing for confidentiality and security.

To accomplish this, Phala uses two types of “worker node” participants that enable the network to operate:

  • Gatekeeper nodes organize interactions between Phala network users, as well as interactions with other blockchains. Gatekeeper nodes are responsible for maintaining the blockchain state and consensus rules. 
  • Miner nodes run a CPU network and fulfill various computation responsibilities by renting their computer power to the network. 

Using two types of nodes in the Phala network helps to separate consensus and computation responsibilities across the network.

Of note, the Phala team launched Khala (PHA) on the Kusama network in order to provide a cloud computing network on its platform. Khala secured the fourth parachain slot auction in July 2021.

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Who Created Phala?

Phala was founded in 2018 by Phala Network Foundation and is led by former Google Software Engineer Hang Yin, former Tencent Product Manager Marvin Tong, among others.

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

The PHA crypto token launched as an Ethereum token in September 2020 and as a Kusama token in 2021.

How Does Phala Work?

Phala is being built as a Polkadot parachain, which is a custom blockchain that feeds into the main Polkadot blockchain, called the Relay Chain. The Relay Chain is responsible for Polkadot’s shared security, transaction settlements and consensus. Through integration with the Relay Chain, Phala benefits from Polkadot’s base features. 

Further, as a parachain, Phala believes it will be quick to connect to the other parachains that are built in the Polkadot ecosystem. Phala participants, who send requests to the network as transactions and the miner nodes, conduct the computations needed to ensure transaction validity and network integrity.

To provide confidentiality, work on the miner node’s CPUs is done within a secure enclave called a Trusted Execution Environment (TEE). This encrypted area within most modern computers’ processors ensures that even the owner of the mining machine cannot see or tamper with what is stored inside of the enclaves of their computer.

Phala gatekeeper nodes act as a broker to create end-to-end encryption between the users and the CPU Miners while ensuring transactions remain private at all times. Once the information gets to the secure enclave, it gets decrypted and executed. The results of this information request are then re-encrypted before being sent out of the enclave.

Phala states that any computation run on the platform, whether it be machine learning data for enterprises or smart contract execution for DeFi apps, is private and versatile across use cases. 
For example, Phala leveraged its technology to create Web3 Analytics, a platform that collects and processes personal data in a confidential way. Confidential smart contracts can perform data analyses on this data only when authorized by the users, giving them total control over their own data.

Why Does PHA Have Value?

PHA is the native utility token of the Phala Network and is used for its cloud-based economy. The PHA token, which has a maximum supply of 1 billion PHA, helps secure the network and maintain the network’s governance mechanism.

Any participant wishing to purchase computing resources and services can do so with PHA, whether it is an external blockchain needing to add resources or an individual looking to confidentially store data. In turn, those who provide resources to secure the network can be paid in PHA.

PHA is also used by gatekeeper and miner nodes, who must stake their PHA to perform their duties. Staking ensures that if they act maliciously, their staked PHA will be slashed as a penalty. Last, anyone who acquires PHA can become a stakeholder and participate in the on-chain governance of the parachain, meaning they can vote on any proposed changes to the Phala network.

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The Phala Network Team
The Phala Network Team

The Phala team aims to enable general-purpose confidential smart contract for DApps and DeFi.

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Why Use Phala?


Phala may be of value to participants who wish to access cloud computing services in a more private and anonymous manner.

Businesses may seek to use Phala’s platform if they are searching for technical solutions that comply with privacy regulations and may alleviate risks of data breaches.

Further, decentralized finance (DeFi) projects looking to add confidentiality features or on-chain data computations may want to do so using the Phala network.