Phala Network is a decentralised cloud platform focused on privacy and verifiable computation. Built as a parachain on Polkadot, it combines blockchain and secure hardware to offer developers a way to run applications without exposing user data.
From artificial intelligence to DeFi, Phala supports a wide range of use cases where security and confidentiality are essential. By removing trust assumptions and supporting open infrastructure, Phala is positioning itself as a practical, secure alternative to traditional cloud services.
What is the Phala Network?
Phala Network is a decentralised computing platform designed to make secure computation accessible and affordable. It does this by separating the process of computing from the blockchain.
Instead of running smart contracts directly on-chain, Phala offloads them to secure environments known as Trusted Execution Environments.
These are physical hardware zones where programs run in isolation from external interference, including from the machine’s operating system.
Initially launched on Kusama as Khala Network, Phala secured its Polkadot parachain slot in early 2024.
This move helped it take advantage of Polkadot’s interoperability and security while introducing its privacy-first infrastructure to a broader ecosystem. By 2025, it will have expanded to also support Ethereum, further extending its reach and use cases.
The platform is particularly focused on confidentiality, verifiability, and performance. These characteristics allow it to support applications like machine learning, financial services, and cross-chain tools.
All computations are tamper-proof, meaning they can be verified by other parties but cannot be manipulated by operators or external entities.
How Does the Infrastructure Work?
Phala’s infrastructure combines blockchain with secure hardware to process sensitive data without compromising speed or confidentiality.
It separates consensus from computation, ensuring that complex tasks are handled off-chain while still being verifiable and secure. This setup allows developers to build scalable, privacy-preserving applications across a wide range of use cases.
The architecture centres around three core components:
- phala-node
This is the Substrate-based blockchain that logs and orders transactions. It provides the canonical source of input but does not perform the computation itself.
- pRuntime
A secure runtime that operates inside a Trusted Execution Environment. All computations run here, protected from tampering or observation, even by the device operator.
- pherry
A relayer service that connects the blockchain to pRuntime. It passes transactions into the secure enclave and ensures they are received and processed in order.
This separation of roles ensures that the blockchain remains efficient while still benefiting from high-performance computation. All data sent to the enclave is processed securely, and results can be written back to the chain without exposing any private information.
To confirm the trustworthiness of this setup, Phala uses Remote Attestation. Each enclave generates a cryptographic proof, signed by hardware keys, verifying that the program is running in a legitimate environment and has not been modified.
These reports include software hashes and configuration details, giving users confidence that the system behaves as expected.
Key management is handled through a decentralised Key Management Service (KMS). Each application receives its own set of encryption keys, which are not tied to a specific machine.
This flexibility allows applications to migrate between different hardware environments without risking data loss or breach.
Phala also supports GPU-based TEEs. These environments are designed for workloads like large language models and AI inference.
Using secure NVIDIA hardware such as the H100 series, these GPU TEEs deliver near-native speed while maintaining the integrity and confidentiality of the data being processed.
What Can the Network Be Used For?
Phala Network supports a wide range of use cases that require secure or private computing. These include artificial intelligence services, confidential analytics, and decentralised finance.
A central product is Phala Cloud, a developer platform that allows users to run their applications in secure enclaves without having to manage hardware themselves.
Developers can deploy containerised applications through a user-friendly interface, and Phala Cloud handles all the encryption, attestation, and computation management in the background.
Phala Cloud supports several key applications:
- Running autonomous AI agents that carry out tasks on-chain or off-chain without leaking sensitive data
- Training and inference of machine learning models in a protected environment
- Building cross-chain tools such as bridge relayers and intent solvers
- Creating infrastructure for multiparty computation and secure data sharing
Another major development tool is Dstack, an open-source SDK created in partnership with Flashbots. Dstack helps developers package their applications into Confidential Virtual Machines.
These can then be deployed on Phala’s infrastructure with minimal changes to the original code. The SDK includes built-in support for secure communication, encrypted storage, and application attestation.
For AI-specific use cases, Phala also provides a GPU TEE solution. This enables the secure execution of LLMs and other large models using NVIDIA’s TEE-compatible chips. It ensures that both the request and the response are protected from manipulation or eavesdropping.
In addition to infrastructure, Phala has introduced real applications such as Web3 Analytics, which is a private alternative to tools like Google Analytics, and Redpill, a decentralised AI aggregator that pulls and processes data across blockchains.
The Phala Token
PHA is the native utility token of the Phala Network and serves several critical functions. It is used to pay for computation, reward compute providers, secure the network, and participate in governance.
The total supply of PHA is one billion tokens. Around 780 million were in circulation by early 2025.
PHA is used in the following ways:
- Users pay PHA to run confidential applications or smart contracts
- Compute providers stake PHA to operate workers and receive rewards for processing verified tasks.
- Delegators can stake PHA by contributing to StakePools or Vaults and receive a share of the rewards.
- PHA is required to submit governance proposals or vote on referenda
Delegation is a key part of the staking system. PHA holders can delegate to a StakePool, receiving a Delegation NFT as proof. These tokens are locked, and in return, the delegator earns part of the pool’s reward.
Vaults simplify this process by allowing professional operators to manage delegations on behalf of others.
The reward structure is designed to be sustainable. 80% of the reward pool goes to workers, delegators, and pool operators, while the remaining 20% goes to the network treasury. Rewards are automatically reinvested unless claimed.
Governance on Phala is open to all token holders. Anyone can propose a change by locking up a small amount of PHA. Others can second the proposal to increase its chance of reaching a vote.
Voting power is influenced by how long tokens are locked. The longer the lock period, the greater the weight of the vote.
Conclusion
Phala Network offers a secure and affordable platform for running confidential applications across Web3. Its architecture combines Polkadot’s scalability with secure enclaves to deliver tamper-proof computation.
With a growing product suite that supports AI, analytics, and smart contract execution, Phala is creating a practical environment for developers who value privacy and trust.
Backed by a clear token utility and a decentralised governance model, the network is positioned to support a wide range of future applications in an increasingly data-conscious world.