Phala Network — CryptoVerse AMA

11 min readNov 30, 2020

Date : 28th Nov 2020

Guest : Marvin Tong, Co-founder & CEO

Q: Please briefly introduce yourself and Phala Network to our community?

A: Phala is a Substrate-based confidential smart contract blockchain on which you can develop confidentiality-preserving and privacy-first blockchain apps. Phala will be a parachain of Polkadot, freeing the privacy computing power of countless CPUs to provide confidentiality-preserving function for all blockchains.

Phala is also a member of Substrate Builders Program starting lineup. Recipient of Web3 Foundation Grant. Phala dedicates itself to release computing powers in TEEs to serve other blockchain of Polkadot and other ecosystem products such as DeFi. We hope the value of privacy protection could be extended to “confidentiality protection”, using our tech to protect all data from leak and breach.

In Phala’s vision, the worldwide connection between all types of devices shall be the weapon against the centralists and monopolies who occupied the Web2.0 world.

We shall “mask” the network and cage the powers, with blockchain and confidential computing.

And the most important step in this revolution is to inaugurate a hall to welcome and gather people of the same vision and build a bridge of liberated confidential computing power.

Just in November 2020, we released our PoC-3 stage testnet : Vendetta

On testnet Vendetta, you will be able to:

- Deploy your device and run it as a computing node on Phala Network as part of the confidential computing cloud.

  • Mining PHA by being stably online and completing computing task and check your mining rewards.

Q: What is the business model of Phala ? How Phala generates revenue for development? Why should everyone use Phala ?

A: Privacy computing and data trading are the core capability of Phala Network. PHA captures the value of data and on-chain resources.

As shown above, PHA is used in data trading for:

- Data trading settlement: Phala implements privacy data management, analysis, and trading by confidential contract. The payment must be done in PHA.

  • Trusted computing resources: The trusted computing power, on-chain state storage, and off-chain storage are all paid by PHA.

Phala would be featured by private computing power and data dealings. And PHA will captured the value of any behavior related to:

1. Dealing of Data Authorization: between analysts and data providers.

2. Resource of Trusted Computing: e.g., trusted computing power, on-chain stats, off-chain storage, etc.;The total supply of Phala token — PHA — is 1 billion, among which 70% (70 million) is minable. Besides, we will airdrop 90 million PHA to users. I have to say, it’s quite aggressive.

The initial distribution is designed radically as 80% of the tokens are distributed to target users to increase product-market fit, encourage early participation, and ensure product development.

1. We want more miners to provide their TEE devices;

2. Based on reason 1, we hope this network to be as stable and secure as possible so it’s impossible for hackers to identify which single one TEE should be attacked;

3. It’s possible to adjust the quality and requirement of computing power.

Q: Phala Network give me attention about application decentralized storage technology about TEE this is really what makes Phala unique. can you explain what new and different about TEE on Phala Network?


As we all know that, main function of zero-knowledge proof is privacy transactions, and Phala Network combines the advantages of TEE and blockchain to realize a universal smart contract that can keep data confidential, and breaks the restriction that all data in smart contracts must be disclosed.

Specifically, TEE is the execution unit of the confidential contract in the CPU. The confidential contract runs in a special black box in the CPU-the security zone (Enclave).

The execution of the contract is completely isolated from the operating system and even external hardware to ensure that the data is not visible to the outside world. Transaction privacy is guaranteed.

If you are interested in learning about TEE tech, welcome to join in:

The management of the key is also a very interesting issue. The key is equivalent to the ownership of all assets on the blockchain.

Therefore, on the current blockchain, the key must be properly kept by the user, otherwise the assets may be lost. Smart contracts can be used to set permissions flexibly, but due to the public nature, they cannot keep keys for users.

But with a secret smart contract, it is different. Users can save the key in the contract, and use the contract to flexibly verify the user’s identity before releasing the key without worrying about the key being lost.

Another benefit of being able to manage keys in the contract is that cross-chain asset management will become very simple. For example, I can save the Bitcoin private key in the contract, allowing Bitcoin to be sent and received as a contract, and another way to achieve Bitcoin’s Cross-chain smart contract.

Therefore, Phala finally adopted the TEE-blockchain hybrid architecture. We encrypt the state data on the chain and anyone can download it without permission. Using a consensus algorithm, each node can get a consistent state.

The most typical TEE-blockchain hybrid architecture is Oasis Labs’ Ekiden. But in our early research, we discovered that Ekiden lacked the foundation of composability-interoperability.

Composability is indispensable in actual blockchain applications and is the basis for achieving large-scale network effects.

Q: Phala Network one make me interesting and make me confuse about Dark Wallet, is if i have PHA it Will be going through ETH addresses or to dark wallet. Can you explain about dark wallet how does it work and functions for Phala itself ?

A: You might have been used to search for everything you need on explorers: Polkascan, Etherscan, etc. Indeed, It’s hard to deny that, sometimes, we do enjoy the joy of being an “on-chain detective”: to observe what one does, who he trusts, and how rich he is, with only a single line of address.

It’s not easy to match on-chain addresses with real-life identity. Still, a human can be tracked and sourced based on his transfers and extrinsic.

We understand that blockchain and digital assets can be utilized by illegal deals and supervision should not be absent facing digital crime issues. But human holds “the freedom of invisibility”, offline or on-chain. That is privacy.

Darkwallet is what we want to define a next-generation privacy-protecting wallet — a killer app that you can hide your private assets and data, anytime at anywhere, as you wish.


Phala Dark Wallet consists of two modules:

- Normal Wallet: simple and the same as other wallets

- Dark Wallet: secret assets converted into “invisible” on-chain.

And you will see 2 types of assets:

- PHA — Phala Network native token

- Other assets — Self-issued private tokens (like ERC20s)

Function to darkside:

- Convert your asset from public (visible) to private (invisible) or in turn

- Secret Transfer: Transfer your dark asset to a recipient, which will not be identified as a “transfer” in block explorers but a phalamodule.

- Issue Secret Token: Define and issue your own secret assets whose balance and transfer records will be invisible as well

What dark asset is to normal asset is like what cash to digital payments. Of course, digital payments are more convenient; but I bet you would love to use cash if you want to protect the time and location of some secret trades.

Q: What is your strongest advantage that you think will make your team leading the market? In contrast, what is your weakness? How do you plan to overcome it?

A: Our core team members came from famous Internet companies such as Google, Tencent, etc. Hang Yin, Co-founder and Chief Scientist of Phala Network, was the head developer for the new Equihash mining algorithm of Bitcoin Gold.

We are very good at Internet Production build and Harecore technology development.This is why Phala is not only a blockchain, we are also providing Privacy focus productions based on Phala Network.

As Phala Network grows, there would be more amazing applications and services based on Phala to serve people and our communities.

For now, you can find many things we are building already:

- DarkWallet, which will include all ptokens through crosschain crypto like pLibra/pDOT/pKSM/pETH/pRenBTC..

- pLIBRA: a confidential computation component built for Libra granted by Web3 foundation

- Web3 Analytics: a cutting-edge data analysis tool for next-generation, able to analyze user data and output results without invading personal privacy.

- Darkpool:Decentralized darkpool of all Polkadot and Kusama defi

Phala team is also very early and familiar with Polkadot. We are one of the first batch of projects positioned as parachains, and it is also the first batch of blockchains using the Susbtrate framework.

We have been conducting technology research and development under the guidance of the Web3 Foundation since the beginning of 2019, and we obtained the Libra Bridge grant in July last year. We also win another grant of Web3 Analytics this year.

This is why you can find Phala.Network in Polkadot litepaper.

Q: The common problem that often occurs cryptocurrency projects is that smart contract vulnerability can lead to loss of funds. what steps has Phala taken for solve to fix this major problem and prevent such occurrences in the future?

A: Safety on chain affact a lot to all crypto business. I think this is why confidential smart contract will be helpful to Defi.

I think that in the near future (in the future), people will use Phala to protect their privacy through two methods:

The first means is that Internet services provide proper data boxes to protect users’ data. For example, the current app can access and use the Web3 data box (W3A) to replace the existing data upload and analysis services, and users can manage their own data requests.

The second is to develop DAPP without server directly on the blockchain. This part is the ability of Phala as a parachain. Third-party development does not necessarily need to be based on Phala, but can develop dapps or defi on combination blockchains and use the privacy computing power they need.

For example, a developer needs to develop a dapp, and needs to use Ethereum-like smart contracts, confidential smart contracts, and decentralized storage after encryption of private data.

It can be developed on any blockchain and easily invoke the Phala protocol. To complete the off-chain black box mission.

I also want to quote Lincoln here:

“that this world, under crisis of centralized trust, shall have a new birth of freedom and that data use of the people, by the people, for the people, shall not perish from the earth.”

Q: Which area does PhalaNetwork focus on at the moment? (DeFi, Dapps,..) and which products/projects are you developing to support it?

A: For now we are focus on launching the mainnet and running as a parachain. Which we will get a SLOT of Polkadot and Kusama.

Welcome to read our talk in community about HOW TO GET A SLOT FROM AUCTION:

Q: Protecting users data and privacy has become a problem that many companies/projects must face in their development. So can you explain a bit about your project Security?

A: Phala applies TEE (Trusted Environment Execution) which allows confidential data to run in an isolated and private environment and outputs results alone with authorization.

An example:

Google wants the DAU (Daily Active User) data in the recent 100 days on Facebook. Facebook is willing to share yet worrying about user data leak.

Here’s how they could perfectly solve the problem with Phala Network:

1. Google developers write their requests into codes on Phala Network and send them to Facebook;

2. Facebook developers receive the requests and started to run the codes locally in Facebook’s nodes;

3. Only results are outputted and sent to Google, instead of all activity information containing sensitive user data.

Q: Partnerships are crucial for Adoption, so can you tell us what partners you have currently and future partnerships?

A: PHALA have made our partnership with many famous project such as : Polkadot, Kusama, Linux foundation, Bluezelle, Plasm Network, Reef, Maskbook..

Welcome to learn more here :

Q: Can you explain what are the differences between the tPHA and the ERC-20 PHA?

A: ERC20 is mint for listing in famous exchanges such as Huobi.

But mainnet token will be used for Miners reward and pay for the privacy computing.

Q: Can you share some usecases of how PHALA is reflected in daily life?

A: This is why we build a decentralized Google Analytics alternative aiming to give users full control of their data called Web3 Analytics.

It provides web performance measurement, customized statistics, and data visualization dashboard, with the cost of integrating only 10 lines of codes.

Empowered by TEE network, Phala confidential smart contract runs the computation of data analysis in TEE nodes, and outputs only the results to the authorized parties, isolated and in parallel.

In Web3 Analytics, user data is end-to-end encrypted between the user browser and backend (a confidential contract), and the encrypted data will be stored in a decentralized storage network. The encryption key is only accessible by its owner and the smart contract, which enables users to withdraw or delete their user data whenever or wherever they want.

Q: Smart contracts are vulnerable to bugs, and even recently three big new DeFi projects were victims of this, costing users funds. How efficient and secured is your smart contract, and did you ever audit it via any external party?

A: Phala applies TEE (Trusted Environment Execution) which allows confidential data to run in an isolated and private environment and outputs results alone with authorization.

We allow different contracts to call each other before executing computation, which is hard to realize for many other projects. We’ve been discussing relevant solutions with Parity and have come out with a mature plan.

Besides, compared with other confidential computation projects, we focus more on cross-chain of data, not only deposits and assets. Our vision is to enable ANY BLOCKCHAIN to be served with our confidential computation technology.

Q: While you build your project, do you take into account community feedback and demands?

A: Yes! We are very value on community, we build our community based on Polkadot and Kusama community, then expand our community in the ones interested in privacy issues.

For example, we take many reward into community :

And there are lots of talk in our forum

About Phala

A Substrate-based confidential smart contract blockchain on which you can develop confidential-preserving and privacy-first blockchain apps. Member of Substrate Builders Program starting lineup. Recipient of Web3 Foundation Grant.

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