and the distribution of digital products.
State of Phala Q4 2024
- Phala partnered with ai16z to integrate TEE features into Eliza, an open-source AI Agent framework. This collaboration improves secure multi-agent operations and strengthens Phala’s position in confidential AI infrastructure.
- Phala announced plans to discontinue the Khala chain and migrate to Ethereum to adopt next-generation platforms like Intel TDX and Nvidia GPUs. This transition will consolidate infrastructure, increase capacity, and introduce an Ethereum Layer 2 network.
- Monthly active users grew 63% YoY and reached an all-time high of 1,125 in December 2024.
- Despite a 7% QoQ decline in PHA-denominated operator rewards, the 202% surge in the PHA token price led to a 170% increase in USD-denominated rewards in Q4 2024.
- Phala introduced DStack, a confidential compute platform that allows secure, scalable workloads within a TEE-enforced environment using Intel’s Trusted Domain Extensions.
Phala Network (PHA) is an AI coprocessor that enables smart contracts to control and interact with AI Agents. It uses a blockchain-TEE (trusted execution environment) hybrid design to incorporate offchain elements — such as artificial intelligence (AI) — into blockchain-focused applications. This design creates the foundation for onchain smart contracts to control AI agents (run by offchain worker nodes) while maintaining security and user privacy. Phala consists of four core components:
- Decentralized Cloud Computing Network: Phala is a backend host of scalable blockchain technology and a trusted execution environment (TEE) to ensure the verifiability and security of compute execution.
- TEE (SGX) Framework: The core Intel TEE architecture scheme that ensures secure and verifiable code execution within an isolated hardware-protected area of a computer’s processor.
- AI Agent Contracts: AI computing programs that enable EVM smart contracts to extend their capabilities offchain.
- Blockchain/Phala Nodes: Attested secure worker nodes that retrieve and execute transactions offchain. These nodes then use the blockchain to organize the decentralized network and incentivize workers.
In 2020, Phala secured a funding round at a $10 million valuation with participation from Candaq Group, InfiChain, Blue Mountain Labs, Incuba Alpha Group, and Exoplanet Capital. Its product was developed to offer AI-enabled, Turing-complete smart contracts, aiming to address the challenges posed by AI and centralized cloud computing. Following this momentum, Phala won a Polkadot parachain slot auction with 1,685 contributors in March 2022. As of Q4 2024, Phala is an AI coprocessor that provides a secure and verifiable compute solution for integrating crypto and AI at the application layer.
For a full primer on Phala, refer to our Initiation of Coverage report.
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Key Metrics
Performance Analysis Monthly Active Users (MAU)
Monthly active users (MAU) measures the number of unique accounts interacting with Phala contracts on a monthly basis. Some users may use more than one account, which is not accounted for in the data. Phala’s monthly active users saw significant growth in Q4, reaching an all-time high of 1,125 unique users in December 2024, a 63% YoY increase. Phala went from an average of 510 MAUs in Q3 2024 to an average of 766 in Q4 (+50% QoQ). This growth was likely driven in part by the partnership with ai16z, which integrated Phala's TEE technology into the Eliza AI Agent framework, potentially attracting new users and developers to the Phala ecosystem.
Usage
AI Agent Contracts are AI computing programs that enable EVM smart contracts to extend their capabilities offchain. AI agent contracts are coded in TypeScript/JavaScript and Phala nodes execute these contracts offchain — though the requests originate onchain. Contract executions (by Phala worker nodes) measure demand for Phala AI Agents.
In Q4 2024, contract executions fell by 6% QoQ. Phala processed over 270 million contract executions throughout 2024. Within Q4, Phala partnered with multiple AI-focused protocols ai16z, Neurochain, and Vana. Executions are expected to rise as Phala’s recent partnerships and integrations take effect.
Phala increased the number of AI Agent Contracts deployed to its network by 4,991 throughout 2024. This number should also grow alongside Phala’s recent Q4 partnerships, which include Ava Protocol and OG. The addition of 4,991 new contracts should diversify the types of compute enabled by Phala, potentially attracting more demand from AI application protocols and their users in the coming quarters.
Service Providers
Worker Nodes provide compute resources to the network. They host AI Agent Contracts (offchain programs) inside the nodes’ TEEs. The TEE protects the workload for code integrity and privacy. To join the network, miners anywhere in the world can deploy Worker Node software clients inside their TEE-compatible hardware setups, getting them verified onchain.
The Phala mainnet initially operated on both the Khala and Phala blockchains. Khala, a parachain on Kusama, was scheduled for retirement on January 10, 2025, after the approval of Khala Referendum 128. This decision followed Intel's discontinuation of SGX-IAS support in April 2025, which rendered Khala workers inoperable.
To promote a smooth transition, all Khala assets were migrated to Ethereum, a network compatible with Intel's TSX and Nvidia's Confidential Compute GPUs. This consolidation streamlined the ecosystem, reduced redundancy, and enhanced the future-proof nature of the Phala Network.
Concurrently, the Phala blockchain continued to expand. Total Phala workers increased by 5% QoQ from 16,610 to 17,420, while Khala workers decreased from 22,693 to 11,705 in preparation for the network's sunset. This migration aligns with the project's long-term strategy of consolidating operations on the Phala blockchain.
Phala has a non-consensus staking mechanism that manages up to 1 million CPU cores from over 100,000 nodes. Stake Delegation includes a feature called StakePool to connect computing nodes with PHA holders. As such, PoolOwners can create and manage StakePools allowing groups of workers to delegate their PHA to the pool. Workers must have a certain amount of stake to perform network operations — thus, having more PHA staked/delegated increases worker capacity.
The number of delegators measures the number of PHA holders that are contributing stake to the network. Delegator participation in Q4 2024 saw a mixed performance. The total number of delegators decreased by 13.3% YoY, falling from 3,448 to 2,988 by 2024 year-end. However, delegators participating on the Phala blockchain increased by 56%YoY from 464 to 724. This suggests a shift towards a more concentrated delegation activity on the Phala chain.
Rewards
Operator rewards experienced a mixed performance in Q4 2024. While PHA-denominated rewards declined by 7% QoQ from 16.4 million to 15.2 million, the surge in the PHA token price by 202% during the quarter resulted in a significant increase in USD-denominated rewards. This translated to a 170% growth in total rewards, rising from $2.2 million in Q3 to $6 million in Q4.
Phala 2024: Advancing Confidential Computing and Secure AI at ScalePhala’s 2025 Real Code for Real AGI report outlines its focus on developing secure, scalable infrastructure for AI-driven applications. As part of this effort, Phala has built on its confidential computing research, improved its AI agent framework, and moved to Ethereum to strengthen interoperability and performance.
nVIDIA Benchmark Studies (H100 & H200)In an earlier study from September 2024, Phala investigated the impact of enabling TEE on NVIDIA H100 GPUs for large language model (LLM) inference. The findings showed that while the GPU itself experienced negligible computational overhead, CPU-GPU data transfers over PCIe were the primary performance bottleneck. Overall, for most LLM queries, the additional overhead remained under 5%.
Building on those results, Phala Network, io.net, and Engage Stack later examined the newer NVIDIA H200 Hopper GPUs under TEE conditions. This research revealed that TEE continues to offer a practical balance between security and performance: overhead for typical LLM queries stayed below 7%, with only a slight increase in Time To First Token (TTFT) and Inter-Token Latency (ITL) compared to the H100. Larger models—such as Llama-3.1-70B—still incurred almost no penalty, underscoring the scalability of TEE-enabled GPU solutions for real-time AI applications. These findings affirm that TEE delivers robust data protection without significantly impacting throughput, making it well-suited for mission-critical domains like finance, healthcare, and decentralized AI.
The Release of DStackPhala introduced DStack in 2024 as one of its remarkable achievements. DStack operates as a VM-level confidential compute platform that lets developers run sensitive workloads within a TEE-enforced environment. It relies on Intel’s Trusted Domain Extensions (TDX) to power Confidential Virtual Machines (CVMs), providing cryptographic verifiability while retaining a Docker-like user experience.
Although DStack remains in an experimental phase, it already simplifies TEE application management and includes secure communication. The platform also accommodates robust scaling. When paired with Phala’s AI Agent Contract, DStack supplies a flexible framework for hosting APIs and performing secure computations, making it a central part of Phala’s 2024 roadmap.
Phala’s Move to EthereumIn December 2024, Phala Network announced plans to discontinue the Khala chain and shift to Ethereum. Intel’s anticipated discontinuation of SGX-IAS support in 2025 would have otherwise disabled Khala workers. Moving to Ethereum allows Phala to adopt next-generation platforms, such as Intel TDX and Nvidia GPUs, for secure, high-performance computing.
This transition consolidates Phala’s infrastructure, reduces redundancy, and increases capacity. Phala will establish a Layer 2 network and a TEE marketplace on Ethereum to promote collaboration with the broader Ethereum ecosystem. Meanwhile, the Ethereum Vault contract modernizes staking and asset management. A streamlined migration route also allows users to reclaim tokens and rewards with minimal effort.
ai16z TEE IntegrationThe collaboration with ai16z to integrate TEE features into Eliza represents another pivotal milestone for Phala in 2024. Eliza is an open-source AI Agent framework for Web3 that uses Phala’s TEE approach to provide secure multi-agent operations with consistent personalities across Discord, Twitter, and Telegram. TEE also boosts privacy and cryptographic verifiability for advanced capabilities, such as a RAG memory system, media analysis, document handling, and autonomous trading.
Eliza’s modular design aligns with Phala’s TEE by supporting new plugins and straightforward scaling. This partnership fortifies Phala’s position in confidential AI infrastructure, encouraging new developments in decentralized multi-agent AI ecosystems.
AI Swarms and Spore.funAI swarm technology, pioneered by Shaw, drives the "Crypto AI Hype," with Spore.fun serving as an early experiment in autonomous AI reproduction and evolution. By integrating the Eliza Framework, Solana’s Pump.fun, and TEE-verifiable computation, Spore.fun fosters a self-sustaining AI ecosystem where agents evolve independently. These AI agents create their own tokens using Solana’s Pump.fun, trade them on decentralized marketplaces, and attempt to reach a $500K valuation to enter the Raydium pool. Successful agents replicate by issuing new tokens, ensuring the continuation of their digital lineage.
To sustain operations, AI agents use token revenue to rent TEE servers powered by Phala, securing a verifiable sandbox for autonomous execution. This design ensures that AI agents not only generate value but also maintain their computational resources, enabling a fully self-sufficient digital ecosystem.
Partnerships and IntegrationsThroughout Q4 2024, Phala has made some key partnerships and integrations to help accelerate its role in pioneering decentralized AI.
Ava ProtocolPhala Network has joined forces with Ava Protocol to embed Phala’s TEEs into Ava's automation infrastructure. This integration enhances data privacy and security for DeFi and Web3 applications while defending against MEV attacks.
0GIn collaboration with 0G, Phala Network is integrating its TEE-based SDK into 0G’s decentralized AI Operating System. This partnership safeguards confidential AI inference, ensures data privacy, and supports verifiable execution for large language models (LLMs) in a secure and decentralized environment.
NeurochainAIPhala Network is partnering with NeurochainAI to supply GPU TEE compute infrastructure, which offers scalable, secure, and cost-effective resources for AI development and machine learning. This collaboration is set to enhance NeurochainAI's services and drive forward the evolution of AI applications.
Vana NetworkWorking together with Vana Network, Phala Network is melding its TEE-powered solutions with Vana’s user-driven data contribution platform. This integration is designed to elevate decentralized data privacy and security, ensuring secure and verifiable data handling while enabling individuals to monetize their data and support further advancements in decentralized AI.
RoadmapIn 2025 Phala Network embarks on developing Phala 2.0. This upgrade will utilize GPU TEE technology to boost processing power and secure AI and privacy-focused applications. The network will also launch the Op-Succinct Layer 2 rollup on Ethereum. These initiatives aim to redefine decentralized cryptographic computing by offering solutions that developers can trust for scalability and security.
Phala Network’s TEE technology supports a wide range of applications — from AI model training and inference to secure block construction on Ethereum and decentralized social media. This year, the network aims to expand Dstack’s reach to more developers, further establishing its reputation for innovative, privacy-preserving TEE infrastructure. At the same time, Phala is enhancing its open-source TEE SDK to equip developers with robust security tools while preparing Phala Cloud as an AI-ready platform that streamlines the deployment and management of TEE applications. The platform will offer one-click Docker deployment, real-time monitoring, trust verification, and flexible billing options to simplify infrastructure management.
Phala 2.0 marks a strategic realignment within the Ethereum ecosystem. Leveraging Ethereum’s Layer 2 scalability will open up opportunities for AI-native applications and advanced cryptographic solutions. This evolution promises to fine-tune tokenomics by balancing supply and demand. The $PHA token will become a universal currency for AI services and enable AI agents to manage their own transactions. With the integration of advanced TDX and NVIDIA GPU support, Phala 2.0 aims to deliver top-tier performance and scalability. Developers will find it easier to deploy high-demand AI applications in a secure and integrated environment.
Closing SummaryQ4 2024 was a momentous quarter for Phala. Monthly active users hit a record 1,125 in December, a 63% YoY increase. The network processed over 270 million contract executions in 2024, showing strong demand. Operator rewards surged in USD terms, driven by a 202% QoQ rise in the PHA token price.
Partnerships with ai16z, Neurochain, and Vana expanded Phala's decentralized AI capabilities. GPU-TEE benchmark studies on NVIDIA’s H100 and H200 GPUs confirmed minimal performance trade-offs for secure AI computing. In 2025, Phala 2.0 will introduce GPU TEE technology and an Op-Succinct Layer 2 rollup on Ethereum to boost scalability and security. The expansion of DStack and Phala Cloud will improve developer adoption. Phala’s strategic focus on performance and ecosystem growth positions it for sustained momentum.