The Phala Network (PHA) is a Privacy-Enhanced Permissionless Computing Protocol.
To explain, Phala protects sensitive data by only processing information in hardware secure enclaves. They claim Phala protects data from system level attacks with a tamper-resistant and trustless execution. Hence, Phala claims they guarantee the integrity of code and data because the protocol only allows authorization actions.
The Phala Confidential Contract is compatible with multiple security standards, including Intel SGX and AMD SEV. Ultimately, the Phala Network provides a secure data storage processing in a decentralized blockchain system.
A Peer-to-peer Computing Network
They want the Phala Network to become the world’s largest peer-to-peer (P2P) computing network. This network could be a standard computing cloud based on Web3.
Being trustless could make Phala a reliable distributed computing network. They create the Phila Network by allowing many users to share computer nodes or space with the network. In essence, Phala is trying to build an enormous decentralized digital computer that will share and process information through the cloud.
The Khala Network
Beyond the Phala Network the Khala Network or a Kusama Parachain that functions as Phala’s Canary Network. A Canary Network is a demonstration project for another network. Khala and Phala share the same mining reward schedule and subsidy pool. Consequently PHA, Phala’s ERC20 (Ethereuem Request for Comment) is compatible with the Khala’s native token K-PHA.
They claim over 20,000 computing nodes are registered on Khala. Those nodes include over 15,000 servers running on Khala. They claim Khala’s servers can provide 1202,000 virtual computer processing units (vCPUs). They claim Khala has 1% of Amazon Web Services’ (AWS) computing power.
AWS claimed to provide 9.95 planetary floating-point operations per second (FLOP) in processing power on 28 June 2021. This means AWS can support 9.95 quadrillion floating operations in a second. With numbers that big, I cannot calculate what 1% of AWS’s computing power is.
The Khala Network was supporting 34,446 workers and 134,848 vCPHUs in over 50 cities on 17 October 2022. They claim Khala offers low-latency and high-performance data confidentiality.
Phala’s parachains connect to Polkadot (DOT) by leasing a slot on Relay Chain for up to 96 weeks with an option to renew. A parachain is a secure chain that connects blockchains. For example, the Phala parachain connects Polkadot’s blockchain with Phala and Khala.
This parachain supports crowdloans and auctions. Phala’s Crowdloan pool. This pool overs rewards of over 15%. The total budget is 14.6 million PHA. Around 15% of the PHA rweards are available now. Around 1,661 Phala and Khala addresses are on the PhalaWorld whitelist for time-limited rewards.
The Khala or Kusama Crowd Loan allows developers to crowdsource Kusama (KSM) for Kusma sltos to bootstrap parachain auctions. Khala won the auction for the fourth parachain slot on Kusama in July 2021 and renewed the lease for that slot for 326 days in May 2021.
They vested around 34% of PHA rewards to contributors’ addresses. They will vest monthly the rest for 11 months. Another 1,952 or 70.82% of Khala addresses received the Color Honor Gem NFT (nonfungible token) as a reward. Another 184 addresses of people contributed over 50 KSM received the Sparkling Honor Gem NFT as a reward.
They are building several digital products with the Phala Protocol. Those products include the Phat Contract.
The Phat Contract is a smart contract with a few added features. Those features include being low-cost and low-latency. Supporting complex computation and long-lasting services without blocking the whole blockchain. The Phat Contract offers native HTTP request support to connect multiple services.
The Phat Contract connects with low latency services such as GameFi and Metaverse backends. It can also support compute intensive applications such as NFT rendering, machine learning, and big data analytics.
A Phat Contract supports privacy-preserving scenarios, including decentralized exchanges. They claim the Phat Contracts are compatible with solutions such as Oracle’s financial software, bots, and Web2 and Web3 services.
The Phala Protcol also supports SubBridge. SubBridge is a cross-chain router for parachains that bridges the Dotsama and Ethereum blockchains and assets. For example, SubBridge allows people to pay for Phala Products with Ethereum (ETH). By integrating SubBridge, a person can leverage bridge solutions. They claim SubBridge is based on the XCM + ChainBridge cross-chain protocol, which powers the cross-chain transmission of assets and information.
The PhalaWorld is a proposed Metaverse, built on the Phala Network blockchain. PhalaWorld will adapt the Soulbound NFT to map users’ off chain activities in the blockchain. It appears PhalaWorld exists only on the drawing board now.
What Value Does the Phala Network (PHA) offer?
Mr. Market thinks the Phala Network (PHA) offers a little value. For instance, Phala was CoinMarketCap’s fourth most trending cryptocurrency on 17 October 2022.
In contrast, CoinMarketCap ranked Phala Network as the 180th cryptocurrency on 18 October 2022. CoinMarketCap gave Phala a 26.93₵ Coin Price, a $110.207 million Market Capitalization, a $268.993 million Fully Diluted Market Cap, and a $454.798 million 24-Hour Market Volume on 18 October 2022. They base those numbers on a Circulating Supply of 409.250 million PHA, and a Total Supply of one billion PHA. CoinMarketCap estimates Phala offers a centralized exchange (CEX) Volume of $198.456 million, and a decentralized exchange (DEX) Volume of $513.480 million.
Meanwhile, CoinGecko gave Phala Network (PHA) a 26.96₵ Coin Price and a ranking of 217 on 18 October 2022. Additionally, CoinGecko gave Phala a $120.267 million Market Capitalization, a 24-Hour Trading Volume of $423.245 million, and a Fully Diluted Valuation of $270.174 million on 18 October 2022. They base those numbers on a Circulating Supply of 444.148 million PHA, and a Total Supply of one billion PHA.
I think the Phala Network is offering services for which there is a demand: hosting, cloud services, and computer power. For instance, Vantage Market Research estimates the global cloud migration services market was worth $92.4 billion in 2021. Furthermore, Vantage projects the global cloud migration services market could generate $340.7 billion by 2028.
Unfortunately, most of the services Phala claims to offer appear to exist only on the drawing board. Hence, Phala’s value is purely theoretical. I think Phala is a cryptocurrency and blockchain platform with enormous potential but little true value. Only speculators who can afford to lose money should consider PHala.