Introduction

After Sunsetting Phala Parachain and Migrating to Ethereum L2, and upgrading the network infrastructure to Intel TDX and GPU Confidential Computing, computing power providers will migrate from the parachain-based environment to the new Ethereum L2 ecosystem. But Phala’s core tokenomics and incentive structure remain largely consistent and predictable.

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1. Total Supply & High-Level Distribution

Phala maintains a fixed total token supply of:

• 1,000,000,000 PHA (1 billion PHA)

Out of the total supply, 70% is allocated to mining rewards. This portion is designed to:

• Incentivize long-term network participation
• Reward resource providers (especially GPU miners)
• Support staking-based security and governance
• Fund ecosystem growth via the treasury

The 70% mining reward pool is further split into three parts:

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2. PHA → vPHA: The L2 Native & Governance Token

After the migration to Ethereum and an L2-based architecture, Phala introduced a staking contract on Ethereum that allows users to convert: PHA → vPHA

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2.1 What is vPHA?

vPHA is the core token for the Phala L2 Network, and is designed to be the primary token used within the L2 ecosystem. Key roles of vPHA include:

• Governance
  Used to participate in community governance and protocol decision-making.
• GPU Worker Staking
  Used as stake/collateral for GPU workers to participate in the mining set.
• L2 Application Token Use Cases
  Intended to be the core token for future GPU-related L2 applications and usage scenarios.

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2.2 Why Stake PHA into vPHA?

By staking PHA into the Ethereum staking contract and receiving vPHA, users:

• Help secure and govern the Phala L2 ecosystem
• Gain access to staking rewards (from the 40% mining reward share allocated to Ethereum staking)
• Obtain the core utility token for future L2 GPU-related use cases

Therefore, the community is encouraged to convert PHA into vPHA, and the protocol offers corresponding PHA staking rewards to incentivize this behavior.

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3. GPU Miners: Core of the TDX-Backed GPU Compute Network

GPU miners are the backbone of Phala’s future TDX-secured GPU computing network. By contributing GPU resources to the network, miners receive a portion of the mining rewards based primarily on:

• GPU type (hardware class and performance)
• Online time (availability and stability)

Rewards are essentially a function of hardware weight × uptime.

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3.1 Reward Weights by GPU Type

Different GPU models receive different reward weights to reflect their relative performance and compute value. Currently supported GPU models and their reward weights: A higher weight implies a higher share of GPU mining rewards, assuming comparable uptime and reliability.

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3.2 GPU Reward Distribution Mechanism

GPU mining rewards are distributed in the form of vPHA.

• Rewards are calculated continuously based on validated GPU uptime and hardware weight.
• Payouts occur every hour, with rewards sent at the end of each hour.

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4. vPHA Collateral Requirements for GPU Miners

To ensure the security and reliability of GPU compute in the network, Phala requires GPU miners to provide additional vPHA collateral for each GPU they operate.

This collateral is not the same as staking into the Ethereum staking contract.
It is non-yield-bearing and exists purely as a security guarantee for GPU compute.

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4.1 Required vPHA per GPU

The collateral requirements per GPU are: Characteristics of this collateral:

• It does not accrue staking rewards or interest.
• It is used strictly as a security mechanism.
• It links the operator’s economic interest to the quality and honesty of the GPU service they provide.

This design improves:

• Sybil resistance – prevents low-cost spam or malicious GPU registration
• Reliability – encourages miners to maintain high-quality nodes and configurations
• Accountability – provides economic basis for punitive or exclusion mechanisms if needed

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5. Quality Control & Governance Over GPU Capacity

To uphold network reliability, the Phala team will periodically verify the quality of GPU compute available in the network. These verifications may include:

• Performance and benchmark validation
• TDX integrity and security checks
• Uptime and stability metrics
• Other trust and safety standards defined by the protocol and community

If a GPU is found to be non-compliant (e.g., underperforming, misconfigured, or malicious), the process is:

1. The issue is documented and shared with the community.
2. Upon announced, the corresponding GPU(s) can be removed from the mining set, and associated rewards can be stopped.

This ensures the GPU mining ecosystem remains:

• Secure
• Reliable
• Aligned with community standards