1. Introduction

As we bid farewell to an eventful year, let's take a moment to reflect on the milestones and transformations that have shaped our journey. From innovations to challenges, this end-of-year recap highlights the key moments that defined 2023. Join us as we look back at the achievements that propelled us forward and the lessons that will guide Phala Network into 2024.

2. Milestone Highlights

1. Phat Contract Mainnet Launch (Q1): this enabled developers to supercharge their dApps with cross-chain capabilities, internet connectivity, and robust computational power. Read more about our innovative off-chain program Phat Contract here.

2. Phala Builders Program launch (Q1): the Phala Builders Program provides funding, guidance, and support for developers that want to build high-value projects with Phat Contract, and add functionality to Phat Contract itself.

3. Polygon Partnership - DevXGlobal Tour (Q2-Q4): as sponsors, we promoted Phat Contract across every major continent during this global tour of guild events, regional hackathons and invite-only Polygon connects.

4. Phat Contract 2.0 Launch (Q4): this pinnacle upgrade to Phat Contract provides limitless building capabilities with its newfound JavaScript SDK and seamless verifiable connections across any API, smart contract, and blockchain. Read more here.

5. Released inDEX App Preview (Q4): we unveiled our cross-chain, intent-centric infrastructure and released the preview version of the inDEX App. Check the App page and the blog for more details.

3. What is Phala Network?

Phala Network: Scale Web3 by Compute

Phala Network, a decentralized off-chain compute infrastructure, utilises over 35,000 Workers (miners) and Trusted Execution Environments (TEEs) to provide exceptional power, security, and privacy. Designed with multiple layers of security guarantees for verifiable computation, Phala Network revolutionises web3 by offering dApp developers robust off-chain capabilities while upholding the principles of trustlessness and decentralization. Explore more about Phala Network here.

2023 Infrastructure Key Metrics

1. Highest Monthly Transactions Among Polkadot Parachains: highlights that Phala’s decentralized infrastructure (DePin), provides stable, high-performance computational services. Read more here.

2. Phala & Khala Infrastructure Milestones: The below metrics were recorded on 22:00 (PST) 30th Dec 2023.



	Finalized Blocks	Signed Extrinsics	Transfers
Khala	5330859	95109091	46759615
Phala	4179838	28889871	30752689
Total	9510697	123998962	77512304

The total signed extrinsics number for Khala Network surpasses all other substrate-built blockchains, reaching a remarkable 95,109,091. That's incredibly close to 100 million on-chain transactions! Congratulations Phamily!

4. Phat Contract

Phat Contract: Redefining Smart Contracts

Phat Contract is the off-chain program running on Phala Network. It distinguishes itself from existing smart contracts in terms of programming language, developer toolchains, and conceptual framework. It supercharges smart contracts by seamlessly integrating cross-chain functionalities, establishing internet connectivity, and harnessing substantial computational power. Interested in building with Phat Contract? Read our docs here.

2023 Milestones:

1. Launch of Phat Contract on Phala Mainnet (Q1): with a decentralized cluster of 150 TEE workers, overseen by on-chain governance (the Council). It efficiently runs 157 Phat Contracts, handling over 800K off-chain requests daily, in comparison to Ethereum's 1.1M on-chain requests. This highlights both the system's stability and its impressive computational power.

2. Launched Permanent Testnet of PoC6 (Q4): we upgraded to the permanent PoC6 testnet, ensuring it mirrors the mainnet experience but without real payments required. This update has been well-received, with over 1,500 Phat Contracts deployed on the testnet to date.

3. Launch of Phat Contract 2.0 (Q4): This update added support for more programming languages and blockchains and introduced our new Template concept to simplify Phat Contract integration for web3 developers. The release featured two essential templates: LensAPI Oracle for easy web3 Social API integration, and Starter Kit for customizable Oracle development on any blockchain with diverse data sources.

4. More Template Releases, Including VRF and Support for The Graph and Airstack APIs (Q4): Templates are one-stop solutions to greatly simplify the implementation of certain use cases. To this end, we start from the necessary infrastructure level services for smart contract developers, including Oracles and the integration of important off-chain APIs like indexing services.

2023 Focus: Refining Phat Contract

Our objective was to ease the initial learning curve and adoption barriers and make Phat Contract essential for next-gen dApps. Our strategy to tackle this challenge had two main aspects:

1. Lower Barrier to Entry for Web3 Developers:
• We aimed to make Phat Contract more user-friendly for existing web3 developers, particularly those proficient in Solidity. Our objective was to improve their development experience by:
• Secure & simple configuration solutions: allowing Phat Contract to connect with smart contracts on any EVM-compatible blockchain.
• Comprehensive support for popular smart contract development environments: this includes HardHat and Foundry. This enables web3 developers to seamlessly test their smart contract integrations with Phat Contract locally, without the necessity of deploying it on our testnet or mainnet.
• Expanded wallet support: including account abstraction. Developers and users can now interact with Phat Contract using Ethereum wallets like MetaMask.
• Enhanced programming language support: specifically for JavaScript and TypeScript, which are the most commonly used languages among web3 developers.

2. Leading by Example with Phat Contract Usage:
• The Phala team collaborated with leading web3 projects like Lens Protocol, The Graph, Airstack, Zurf, and Huddle01, using Phat Contract to address real-world challenges. These solutions were then turned into templates for the developer community, allowing easy replication and learning from successful cases with just a few clicks.

The Next Phase: From Development to Deployment

Over the past three years, we've transitioned from platform development to product enhancement. The Phala blockchain has evolved in functionality and stability, leading to a focus on use cases showcasing Phat Contract's effectiveness.

As an open, trustless platform, Phat Contract is designed for modular use in various applications, simplifying development. This modular concept is central to our Templates and crucial for Phat Contract's ecosystem growth.

Phat Contract has already excelled in advanced web3 social applications, by outperforming current dApps in user engagement and performance. Phala remains dedicated to meeting the web3 community's changing needs with Phat Contract.

5. SubBridge & inDEX

SubBridge & inDEX: Pioneering Cross-Chain Connectivity

SubBridge, initially a bridge for EVM chains and Polkadot Parachains, now connects with inDEX, a cross-chain intent infrastructure. This allows for efficient sharing of objectives between blockchains. SubBridge facilitates chain connections, while inDEX, using Phat Contract, optimizes trades across chain liquidity pools, enhancing trading efficiency. Together, they offer a unified solution for streamlined cross-chain transactions, improving the web3 experience. More details at index.phala.network.

2023 SubBridge Metrics:

In 2023, SubBridge was a standout success, greatly aiding $PHA holders by enabling the trustless transfer of assets:

• Total $PHA bridge volume was 241,640,089 $PHA with 1408 total transactions:
• Old version Khala-Ethererum bridge = 87443169 $PHA volume
• Old version Phala-Ethererum bridge = 23943703 $PHA volume
• Sygma (latest) version = 130253217 $PHA volume

• SubBridge also performed many additional actions for cross-chain message passing:
• Khala XCM system dealt with 5691 transactions
• Phala XCM system dealt with 1792 transactions

2023 Milestones:

1. Launch of Sygma Bridge on Khala and Phala Enhances Stability and Reduces Fees (Q2): we transitioned from ChainBridge to Sygma Bridge on Khala and Phala networks, significantly enhancing transfer stability, cutting over 80% of tx fees, and halving confirmation times compared to the old version. By December, all PHA liquidity had moved to Sygma Bridge, enabling arbitrary PHA transactions.

2. Released inDEX App Preview (Q4): we unveiled our cross-chain, intent-centric infrastructure and released the preview version of the inDEX App. This launch demonstrates our commitment to integrating off-chain technology to enhance cross-chain trading. Check the app page and its dedicated blog for more details.

3. Trustless Execution Layer Built With Phat Contract (Q4): we developed a trustless execution layer on top of Phat Contract, creating a trustless and transparent protocol. This enhances user experience in asset transfers across multiple chains. Soon, we'll enable one-click transfers of PHA between Khala and Phala on SubBridge, powered by this execution layer.

Challenges, Successes, & Lessons:

In 2023, we concentrated on improving DeFi infrastructure with Phala technology, tackling the challenges of trading across various blockchains. Despite market and technical challenges in integrating different blockchains, these experiences were crucial for our growth. Looking ahead to 2024, we're enthusiastic about the Q1 launch of inDEX, furthering our commitment to enhancing DeFi and user trading experiences.

6. PhalaWorld

Building Digital IdentitIes

PhalaWorld, using Phat Contract and Soulbound 2.0 NFTs on the RMRK 2.0 standard, reflects your crypto journey, evolving through community contributions. It combines on-chain and off-chain activities into unique NFT avatars, advancing our web3 metaverse vision. Read more here.

2023 Milestones:

1. Building Marketplace Functionalities (Q1-Q2): This included supporting NFT transactions and transfers, as well as enabling the view of all valid actions on the marketplace.

2. Marketplace Launch (Q2): Enabled community members to browse through all the ultra-high-definition NFTs and build their collections. Additionally, the marketplace began supporting the display of Delegation NFTs on user profiles and allowed for transfers and trades.

3. Investigating PhalaWorld's Path (Q2-Q4): PhalaWorld's new chapter, AI+NFT, expands our open-world vision with adventurous branches, aiming for a more authentic environment. This involves making NFTs lifelike digital representatives in the virtual world by embedding AI souls, adding life and utility into digital assets.

Pausing PhalaWorld, Not Canceling

PhalaWorld remains a valuable Phat Contract use case despite slower progress. Our current focus on Phat Contract and inDEX has led to a temporary pause in PhalaWorld, not a cancellation. We're exploring its NFT utility integration into these projects and offering buyback options to original buyers. While PhalaWorld's development may be gradual, we remain optimistic about its future potential.

8. Events & Partnerships

Phala's Year of EVM Engagement and Growth

We prioritized Phat Contract's integration into the EVM ecosystem, engaging in key Ethereum events and Polygon meetups. Our partnerships focused on developer communities like Polygon DevX, Developer DAO, and the Lens Ecosystem. Phala was featured in 7 major conferences, hosting 10+ events and speaking at 60 stages globally to connect with web3 developers. Our efforts mainly targeted the American and European markets, rich in web3 developer activity, to expand our builder community.

2023 Milestones

1. Launch of the Phala Builders Program (Q1): The Phala Builders Program (PBP) offers financial backing, guidance, and assistance to developers aiming to create high-value projects utilizing Phat Contract and enhance Phat Contract's functionality. We are pleased to present the following data reflecting the growth of the PBP to date:
• PBP breakdown:



• An overview of funded projects:

2. Events & Branding success (Q1 - Q4):

Participation in key web3 events allowed us to gain valuable insights into our target audience. Engaging in in-depth panel discussions with partners such as Lens Protocol enhanced our understanding of Phala's value proposition in the web3 social space.

Phala's presence at major Ethereum community conferences, coupled with the sponsorship of various side events, contributed to an overall branding success. Specific examples include:

• Polygon & Phala Global DevX tour: together with Polygon ecosystem, Phala team joined 14 cities to promote Phat Contract for developers. We left impression with over 2500+ attendees!

Area	Cities	Event Attendees
Africa	2	310
Europe	6	1091
America	6	1200+



• Infra Gardens: in collaboration with the DIA Data, idOS and Polygon, we established an iconic series of events for DePin web3 projects.

3. Closed Strong Partnerships (Q2 - Q4): These served as key drivers for raising awareness, improving the capabilities, and increasing the adoption of Phat Contract. Key highlights include:
• Polygon ecosystem: we partnered with Polygon for the global Polygon DevX Global Tour, covering 5 continents and 20 cities.
• Lens Protocol: we announced a strategic partnership with the Lens Protocol core team, leading to the inclusion of our LensAPI Oracle in their developer documentation.
• LensAPI Oracle adoption: the LensAPI Oracle connects your smart contract to Lens, one of the most popular web3 social graphs. Its template was adopted by 3 teams, which we proudly call our new partners: Huddle01, Airstack and ZURF.
• The Graph Protocol: we initiated our partnership by developing The Graph Trust Score template. It makes it easy to integrate multiple subgraphs, process the data from them and wrap it to be a simple API which can be digested by smart contracts.
• Partnership and use-case synergy: these partnerships became a reality thanks to the introduction of Phat Contract 2.0. We ventured into a multitude of use-cases, encompassing web3 social, DeFi, NFTs, DePIN, AI, Real World Assets, and beyond. Discover how harmoniously our partnerships meshed with these use-cases on our website.

4. Positioning of Phat Contract within leading web3 developer communities: Recognizing the significance of partnering with prominent web3 developer communities beyond physical events, we engaged builders who actively shape our product and construct real-world use cases powered by Phat Contract. An example of this is our two-phase hackathon with Developer DAO, boasting over 10,000 active members. This event generated 30 submissions, highlighting Phat Contracts' adaptability and offering valuable insights for our technology's evolution

5. Our journey of the Rebranding

• Beginning our rebranding journey in late 2022, Phala strengthened its position as a web3 computation provider in 2023. The shift involved transitioning from a privacy provider to a broader computation provider, extending our reach from Polkadot and Kusama to the EVM ecosystem.

• While the core technology remains unchanged, our focus is on reinforcing our value proposition as the premier computation infrastructure. This involves catering to a diverse range of use cases beyond privacy, encompassing computation and off-chain developer tooling.

9. Compute

The Role of Compute in Phala Network

In Phala Network, "compute" means securely processing data and executing code for smart contracts and dApps using Trusted Execution Environments (TEEs). Workers contribute their compute power and earn PHA rewards, ensuring a strong and decentralized network for Phala's applications and services.

2023 Milestones:

1. Computation Mechanism & Budget Balancer Launched on Phala: we launched Phala's computation mechanism, shifting about one-third of network activities from Khala. The Budget Balancer introduction is a key step in decentralizing our tokenomics across both chains, demonstrating stable and high-quality performance as a Phat Contract application.

2. Significant Progress in Technical Upgrades and DCAP Technology Implementation: we prioritized technical upgrades aligned with upstream developments. As one of Polkadot's largest node projects, our diverse use cases uncovered issues and code improvement suggestions. We're nearing the launch of DCAP tech nodes after code development and internal testing, which will significantly enhance our network's computing power and technical capabilities.

3. Enhancing User Experience for Operators and Delegators, and Advancing Mining Tools: our Vault function has grown rapidly, with 57.4% of delegations managed by Vault owners, indicating strong user preference. We faced a temporary issue but resolved it to prevent losses. Mining tools on Khala have been smooth for operators, but PRBv3 introduced challenges for those with many workers. We are now actively working on improvements, aiming for an enhanced product by Q1 2024 to improve the user experience for both operators and delegators.

2023 Infrastructure Key Metrics

1. Significant Growth in Computation and Community Engagement Achieved: we've witnessed rapid computation growth, increased workers, virtual CPUs, and rising delegation. Despite halving network rewards, our community's commitment and growth remain strong.

1. Robust Computation and Community Growth: we've seen substantial computation growth with more workers and virtual CPUs. Rising delegation and stake ratios show successful tokenomics and a united community. Despite two halvings, reducing network rewards to 56.25% of early 2023 levels, our network's computation and staking ratio continue to rise, reflecting our strong infrastructure and expanding community commitment over the past year.

Challenges, Successes, and Future Opportunities

In 2023, we had both successes and challenges. The vault issue in October affected some delegators. However, despite this issue, the vault remains a valuable feature. Over the past year, it has attracted 57% of total network delegation, demonstrating strong trust from delegators.

Our DCAP development is nearly complete, allowing high-quality workers to join Phala Network. After testing, we'll release it to the community as a major event for the next year. Intel's IIS support by year-end may pose challenges, but we're confident in overcoming them and excited about future opportunities.

10. Community & Governance

Empowering Community Voices

Phala, as a community-driven project, operates on a decentralized model where most decisions are made by the DAO, rather than a central authority. The shared council of Phala and Khala, consisting of 8 members, is responsible for on-chain governance, managing treasury proposals, and overseeing tech upgrades. Community members can earn PHA rewards for their contributions, encouraging active participation and innovation.

2023 Community Milestones:

1. On-chain users & activities:

A) Active addresses:



• The average number of active addresses on both Phala Network and Khala Network was 1,429 users.
• The number of active addresses on Phala has significantly increased since the launch of Phat Contract and computation in Q2.

B) On-chain Holders



• There are 42,692 $PHA holders on average in 2023, including ERC20, Khala, and Phala holders.
• After the launch of SubBridge and continuous improvements to the bridging experience, it's evident that ERC20 holders are migrating to both the Khala and Phala blockchains.
• Compared to Phala, Khala Network remains the preferred choice for $PHA holders when it comes to staking.

2. Stronger Online Presence:
• Phala's website welcomed 54,000 unique community users.
• Dramatically improved the SEO performance of the Phala website.
• Experienced a 100% increase in 30-day active users during Q4.
• Phala enhanced its blog system, which can be accessed at https://phala.network/blog, and successfully published 56 pieces of content.





0. Increased Community Exposure:
• Our social media presence saw significant improvements between Q3 and Q4.
• Since Q3, the Phala team has shifted its marketing strategy to focus more on targeted and higher-quality engagement.
• Between Q3 and Q4, there was a significant improvement in social media performance:
• Average impressions saw a 146% increase.
• Monthly likes rose by 133%.

1. Phala Network Ambassadors: The Backbone of Our Community:
• Phala ambassadors are an extension of our community team. They’re passionate community members, who are rewarded for volunteering to perform marketing, community, and content related tasks.
• At Phala, we are focused on creating the best possible community and our ambassadors play a major role in acting as a bridge between Phala and the communities around the world.
• ePhala ambassadors have contributed a wealth of content to educate, promote, assist, and engage with the Phala community based on open requests!



• Who are these heroes?



Name	Role	X (Twitter)	Github
Cappex	Senior	@CryptoCappex	@cappehub
Tioneb	Senior	@tioneb442	@tionebDotsamapha
inFace	Senior	@infaceAi	@infaceAi
Gatorkorps	Senior	@gk18_dog	@gk1845
Rafa	Senior	@RafaelCabilla	@rafaccc
Scarlet	Ambassador	@TheScarletThr	@TheScarletThread
Parachainboy	Ambassador	@parachainboy	@johnrhodel
Gabekoin	Ambassador	@gabekoin	@gabekvds
Arno	Ambassador	@test_ut	@arnobase
Janema	Ambassador	@JanemakeCrypto	@Janemake
Leo	Ambassador	@neurolauncher	@LeoNeurolanche
Ivan	Ambassador	@Dima35109517	@MrDobby007
DefiGuy	Ambassador	@defiguy22	@astardefi
Rom1	Ambassador	@rom1_dot	@Rom1io
Bekka	Ambassador	@ayomide_bajo	@ayomidebajo
Tori	Ambassador	@ToriRibolla	@toriribolla
Coinisan	Ambassador	@Coinisan	@coinisan
Favour	Ambassador	@official_bles1	@BBoss01
Kamala	Ambassador	@KamalaImmac	@KAMALAIMMACULATE
Seq	Ambassador	@Seq921	@MarcoB95-lab
D_wulf	Ambassador	@kuhn_on_kash	@bluewitch
DKSM	Ambassador	@twdksm	@darknight7
Pigro	Ambassador	@pigro85	@pigro85
Chris	Ambassador	@BckChris	@chrisbck
ZunkCii	Ambassador	@ZunkCii	@ZunkCii

2. Top Tier Community by Treasury: the combined treasury balance of Phala and Khala ranked as one of the largest in the Polkadot ecosystem.





	Available treasury in $PHA	USD worth
Khala Network	55.09M	≈ $5M USD
Phala Network	3.03M	≈ $300k USD

On-Chain treasury instead of a “Foundation”:

Phala Network doesn't have a traditional foundation. Instead, all technical development and support for the ecosystem are sponsored by our on-chain treasury.

Status	PHA Amount	Count	Percent
Awarded	13078825	33	79%
Proposed	128353.478	6	14%
ApproveVoting	293266.4862	2	5%
Rejected	36000	1	2%



What were the funds used for?

Purpose	Proposal Number	Proposal Funds	Funds Percent
Ecosystem Builder	5	8280332	63%
Infra Support	16	1375771.435	11%
Event	6	1242843	10%
Liquidity	2	1155126.11	9%
Marketing & Growth	3	1012752.458	8%
Computation Ecosystem	1	12000	0%

12. Reflections and Lessons Learned

Hang Yin - CTO & Co-Founder:

“2023 is well deserved to be the turning point of Phala Network. Before this year, nobody can really use Phala Network, although we have been building the infrastructure and the computing power supply. However, with the launch of Phat Contract and inDEX in 2023, we can finally face the real users, and the growth of the product usage becomes the top target.

To get users, we need to understand the audience, learn the requirement, and build the product to solve the real world problems. We started by asking ourselves who will use Phala Network, and as a result, we decided to switch the focus from Polkadot-only to the entire Web3 ecosystem — embracing Ethereum and other L1 and L2 chains. This decision greatly extended the our potential user group.

‘To a man with a hammer, everything looks like a nail.’ This is the typical case of web3 infrastructure projects. However, a good lesson we have learned this year is that a great product always solves real problems. At the beginning, nobody knows what the problems are. So we started with our HTTP request capability. With more feedback from the users, we discovered the demand of cross-chain and off-chain connectivity, and finally shifted the product direction to Blockchain Coprocessor. This put Phat Contract in a much clear position in front of the developers.

Figuring out the positioning of the product is one thing, but to build the a good solution is another story. For instance, Phat Contract was launched with only Rust language support, and this turned out to be pretty difficult for developers to get hands on. Therefore we have added the most popular language, Javascript, to Phat Contract, and have launched the low-code and CLI-based project templates. In the end of the year, we are happy with the 5 launched templates, ranged from Lens oracle, VRF, to The Graph oracles.

We believe a feedback loop is necessary to drive the long term growth of a product. Launching Phat Contract templates and building solutions for developers are not the the end of the story. More importantly, we want to hear from the user, improve the products, and explore the next problem to be solved. Therefore building a product feedback loop will be one of the top focus of the team in 2024.

With so many achievements and lessons learned in 2023, we will shape a bright future of Phala Network in the next year. 2024 will be the year of product for Phala Network. Great products drive the success of Phala Network, and the marketing and community growth will follows. As such, we will continue building the feedback loop to learn the user requirements and build the great products on Phala Network”

Marvin Tong - CEO & Co-Founder:

“As we step into 2024, marking the 5th year since Hang and I embarked on the Phala Network journey, it's a moment to reflect on the remarkable path we've traveled. It's unusual in the crypto space to witness such a blend of incredible achievements and missed opportunities as we've seen over these five years. Our journey, characterized by a vibrant community and a robust computational network, is a testament to our commitment and vision.

Back in 2021, Phala Network was launched following a $1 million fundraising effort in 2020. This milestone was achieved with overwhelming support from our dedicated Phala believers, the wider Polkadot community, and advocates for a future of trustless off-chain computing. To ensure Phala's long-term success, we established Hashforest Technology, a technical entity focused on assembling the finest team to drive Phala towards its ambitious goals.

Our persistence in pursuing Phala's dream is unwavering, regardless of how our team is perceived. We envision: 1. A future where the internet is improved for the better. 2. In this enhanced internet, blockchains and other trustless technologies facilitate human, and potentially AI, interactions within a more trustworthy environment. 3. Phala Network emerging as a pivotal force in driving blockchain adoption.

Success in crypto can be approached in two ways: catching the hype or being genuinely useful. Catching the hype demands exceptional skills in crafting compelling narratives for investors, excelling in marketing strategies, aligning with speculator desires, and creating a momentum through strategic incentives.

However, the path of being genuinely useful, which Phala committed to in 2023, is undoubtedly more challenging. While there may be moments of frustration in the community, especially when comparing our pace with others, I firmly believe in the importance of Phala Network's utility to the web3 space. Our focus remains steadfast on this objective, and I am resolved to continue this pursuit until Phala's impact in web3 is undeniable and substantial.”