What Is Phala Network?
Phala Network is a decentralized cloud computing network built on blockchain technology with the goal of providing cloud computing services securely and privately. The network uses the trusted execution environment (TEE) technology found in computer processors to provide secure and private cloud computing capabilities for users of the network. Phala Network is built as the Polkadot blockchain as one of Polkadot's parachains.
Phala Network was launched in 2018 by Marvin Tong, Zhe Wang, Jun Jiang, and Hang Yin. The network's development is overseen by the Phala Network Foundation as well as users participating in the network's governance. Phala Network is built to be a blockchain-based alternative to centralized cloud service providers like Google Cloud and Amazon Web Services (AWS). By utilizing blockchain technology to provide cheap and efficient cloud service, and focusing on user privacy, Phala Network aims to offer a superior service to its centralized competitors.
What Is Phala: Quick facts
- Phala Network is a blockchain-based decentralized cloud computing service provider. It is the blockchain equivalent of big cloud service providers like Amazon Web Services (AWS), Oracle, and Google Cloud.
- Phala Network is very focused on privacy and security. Using the network's services without anyone knowing is a big selling point.
- Phala Network allows anyone to join the network and rent their computer's computing power and storage space to those who need them at a fee.
- Phala Network runs on the Polkadot blockchain as one of its several parachains.
Now, let’s look at how does Phala network work.
How Does Phala Network Work?
Phala Network works by letting individuals join the network using their computer as a node on the network. The computers that are nodes on the network can be used by clients to meet whatever cloud computing needs they have.
For example, a client who wants to carry out some computation on Phala Network will have those files encrypted and sent to the computer of someone who runs a node with his computer on the network. Once on the person's computer, the file is decrypted in the trusted execution environment (TEE) and the computation is carried out, the results are then encrypted and sent back to the client.
The trusted execution environment (TEE) is a secure part of a computer's main processor. Computations carried out in the trusted execution environment of a processor are secure and private so much so that even the owner of the computer on which the computation is running does not have access to the data in it.
There are two types of nodes on the Phala Network, Miner nodes, and Gatekeeper nodes. Miner nodes are run by people who want to put up their computer hardware on Phala Network for use by clients on the network. Gatekeeper nodes ensure that there is end-to-end encryption on Phala Network between clients using the network and the computers of the miner nodes on which instructions are executed. Gatekeeper nodes make sure that information on the network is encrypted once outside the TEE of Miner node processors to ensure that the information is private at all times.
This way code run on Phala Network is private at all times seen only by the client who runs the code. People and blockchain platforms typically use Phala Network to run code for smart contracts executing transactions that need to be private. Both Miners and Gatekeepers have to stake PHA tokens with the network for the privilege of running a node. In the case of any wrongdoing, the tokens staked with the network are slashed and their value decreases.
Where Is PHA Used?
The PHA token is the native token of Phala Network. It is a utility token and is used to carry out activities ranging from paying for transactions to becoming a Miner or Gatekeeper on the Phala Network.
Providing Services on Phala Network
Miners who provide their computer hardware for use on the Phala Network as well as Gatekeepers who secure the network need to have PHA tokens to be able to carry out their duties. They both need to stake PHA tokens to be able to provide their services on Phala Network. Staking PHA tokens is a financial incentive for them to do their jobs well as any default on their part will result in some part of the tokens that have been staked being slashed. Both Miners and Gatekeepers also get rewarded with PHA tokens.
Transaction Payments
The PHA token is used to pay for all transactions carried out on Phala Network. Users who want to use the network's cloud computing capabilities pay for the services they receive in PHA tokens. While the Miners who put up their computer hardware capabilities for use on the network get paid in PHA tokens when users make use of their hardware capabilities.
Network Governance
Another thing about PHA is that the PHA token is used to participate in the governance of the network. Like many other blockchain-based organizations, Phala Network is governed by the Phala Network community and by PHA token holders in particular. Community members can put proposals forward regarding changes that they want to see on the network and PHA token holders vote on the proposals. Proposals that receive more than 50% of the total votes cast get executed on the network.
Phala Network History & Founders
Phala Network was founded in 2018. Marvin Tong founded the network along with three other people Zhe Wang, Jun Jiang, and Hang Yin. All co-founders had previously worked at big technology companies like Google, DiDi Chuxing, and Tencent.
They all came together to launch Phala Network because they wanted to create a cloud infrastructure for the blockchain that would enable blockchain-based organizations to carry out computations and run code privately.
Phala Network continues to be run by a team consisting of the four original co-founders with the addition of Ruby Wang as the Chief Marketing Officer of the platform.
PHA Tokenomics
What is PHA token approach to tokenomics and what makes the token valuable? The PHA token is the native token of Phala Network. It has a maximum circulating supply of 1 billion PHA tokens after which no more PHA tokens will be created or entered into circulation. Currently, there are 227 million PHA tokens in circulation according to CoinMarketCap. This means that there are still 738 million PHA tokens yet to enter circulation before the maximum supply is reached.
Unlike a lot of crypto projects, the PHA token did not have an initial coin offering (ICO) event where the sale of the token was officially opened to the public. The Phala team sold some PHA tokens privately to raise money for the development of the network but other than that the public gets access to PHA tokens through the token mining process. According to the project's tokenomics whitepaper, this is how the tokens are distributed:
- Private sale – 15%
- Mining rewards – 70%
- Team incentives – 5%
- Community incentives – 1%
- Polkadot ecosystem development – 9%
The value of the PHA token is due to its wide range of uses on Phala Network. Anyone who wants to use the services of the network has to own some PHA tokens to pay for the services rendered. Likewise, those who want to provide services on Phala whether as Miner nodes or as Gatekeeper nodes need to have some PHA to be allowed to provide services on the network.
How Is PHA Created/Mined?
The PHA token is created through a mining process on Phala Network by Miner nodes carrying out computations on their computer's TEE for the network. All Miner nodes on the network share a total payout of 720,000 PHA tokens at the end of each day for providing their computing power. The daily release of new PHA tokens means that the supply of PHA tokens is always increasing for now and it may have some effect on the PHA price.
70% of the maximum circulating supply of PHA (or 700 million PHA tokens) is ear marked for distribution through the Miner nodes through the mining process. The mining rewards paid out to Miner nodes are expected to reduce over time by 25% every six months as the amount of PHA available for mining rewards reduces. When all 700 million PHA tokens have been given out as mining rewards then the mining process will end and no new PHA tokens will be created.
Phala Network Competitors
Phala Network has two sets of competitors. The first set of competitors is decentralized platforms like Filecoin and Sicaoin which provide cloud-storage capabilities on the blockchain. These platforms enable blockchain users to store their files and data on a decentralized cloud in a safe and private manner and retrieve those files when needed. Phala Network also provides cloud storage services but it goes beyond that to enable computations to be carried out on the network privately and securely.
The other set of competitors is privacy-focused blockchain projects providing the infrastructure for transactions to be carried out on the blockchain privately and anonymously. Projects like Tornado cash, Monero, and the much talked about zk-SNARK technology all attempt to bring some privacy to blockchains and blockchain transactions.
However, Phala Network is a more robust solution than the others because it is not a standalone platform. Any blockchain or blockchain-based project can integrate Phala Network into its platform to provide privacy for its users.
Phala is the ultimate all-purpose decentralized cloud service platform on the blockchain right now. Any cloud service needs from storage to computation can be carried out on Phala Network. Phala Network also allows integrations with other projects and platforms so that any platform on the project can utilize the network's cloud services to provide privacy features for its users among others.
Phala Network Partnerships & Investors
To raise money to develop Phala Network properly, the founders raised money from investors by having a private token sale. The network held two rounds of private token sales and raised a total of $1.68 million over both rounds. The investors in the rounds received 15% of the total amount of PHA tokens in exchange for their investments.
The network also received grants from the Web3 Foundation an organization founded by Ethereum co-founder Gavin Wood to support the development of innovative blockchain-based projects. Phala Network has also entered into partnerships with other blockchain-based organizations to enhance its platform and product offerings. Phala Network's partnerships include those with Chainlink, SubQuery, and Amara Finance.
Phala Network SWOT Analysis
Phala Network Strengths
Phala Network makes it possible for blockchain-based organizations to access cloud-based computing resources on the blockchain easily and seamlessly. This could be anything from storing files on the cloud to using Phala Network to carry out confidential transactions using TEE technology.
Phala Network Weaknesses
Phala Network depends on bridges between other platforms to provide integration of Phala Network into other platforms. This is a weakness because bridges in crypto are highly susceptible to attacks by hackers looking to steal funds and some of the biggest exploits in the crypto ecosystem have been on bridges. Such attacks, if successful, could destroy Phala Network.
Phala Network Opportunities
Phala Network provides something that is not a common feature of blockchain-based platforms and that is the ability to carry out transactions privately. Phala Network has the opportunity to offer that to blockchain organizations that need private transactions for their
Phala Network Threats
Privacy-focused blockchain platforms run the risk of becoming a haven for people carrying out illegal transactions on the blockchain. Phala Network could become used by hackers to move stolen crypto funds for example. This might then attract some repercussions like a government sanction on the network. This would be much like how Tornado Cash, a crypto project focused on helping people move funds anonymously and privately, was sanctioned by the United States government.
Phala Network Roadmap
Heading into 2022 the network is focused on building out its main network platform and adding more features to the already existing ones. The upgrades scheduled include the implementation of a new version of smart contracts (known as fat contracts) on Phala Network to make computations easier. Plans are also in motion to upgrade the tokenomics model of the PHA token as well as bring NFTs to Phala Network among other things.
Phala Network Updates, News, & Highlights
Phala Network Joins Blender Metaverse Program
Phala Network has joined a partnership with Blender, a 3D computer graphics software company, to create a platform for rendering 3D images in the metaverse. The partnership includes Phala Network along with other tech giants like Microsoft, Nvidia, and Adobe, and it represents Phala Network's latest foray into the metaverse.
Bubblemaps Listing
Phala Network has been listed on the blockchain data visualization service Bubblemaps. Bubblemaps provides data visualization services to blockchain platforms to shed light on what is actually going on inside the project. Phala Network users can now see data for the network on Bubblemaps represented in easy-to-understand ways to enable them to understand the network even better.
Moonbeam Integration
Phala Network recently announced some new developments about PHA and the network being fully integrated with the Moonbeam ecosystem. The integration brings the Phala Network to users on the Moonbeam ecosystem. Phala Network's PHA token will also be available for use by Moonbeam's users on projects built on Moonbeam. Moonbeam's GLMR token is also now available on Phala Network for use by Phala Network's users.
Where To Buy PHA
One of the easiest and most convenient ways to buy OKX is through decentralized exchanges like OKX. OKX allows you to purchase PHA tokens using a variety of payment methods, such as credit and debit cards and bank transfers.
You can make your purchase with your preferred local currency from over 92 available options and even your other cryptocurrencies. Keep in mind, however, that some payment methods might be unavailable to you depending on your region. OKX also provides free educational resources to help you learn more about PHA and other cryptocurrencies.
How To Stake PHA
What is PHA staking and how does it work? PHA token holders can stake their tokens on the network to earn rewards in PHA. The PHA tokens that are staked are distributed to the miners on the network who provide their computer hardware for network computations and receive PHA rewards. The miners share the rewards that they receive with the people who have staked their PHA tokens with a particular miner. You can head over to stakepool on the network to stake your tokens and start earning rewards.
FAQs
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Is Phala Network a Blockchain?
No, it is not. Phala Network is built on Polkadot as a parachain on the Polkadot blockchain Polkadot parachains function like their own blockchains due to the flexibility of Polkadot's ecosystem.
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How Does Phala Network Make Private Computations Possible?
Phala Network uses the trusted execution environment (TEE) of a computer's processor to enable computations to be executed privately. The TEE is a part of the processor where code and data loaded in it are securely protected and are not visible even to the computer's owner.
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Can I Earn Rewards on Phala Network?
Yes, you can. PHA token holders can stake their tokens on the Phala Network stakepool and earn rewards in PHA tokens. Head over to the Staking Rewards website to find out more about staking your PHA tokens, the returns you can receive, and the risks involved.
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Can I Buy PHA With My Local Currency?
Yes. You can buy PHA tokens directly with a credit or debit card in your local currency on centralized exchanges that support them, like OKX.
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Can I Swap Other Tokens for PHA?
Yes, you can. If you want to swap or trade other tokens for PHA instead of buying it with fiat, you can do that on any centralized or decentralized exchange that supports swapping or trading another cryptocurrency for PHA, such as OKX.
