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What is Phala Network (PHA)?

Phala Network operates as a decentralized cloud computing platform leveraging blockchain technology. Its primary aim is to deliver secure and private cloud computing services. Utilizing the trusted execution environment (TEE) inherent in computer processors, the network ensures the confidentiality and security of user data. 

As a parachain of the Polkadot blockchain, Phala Network is intricately integrated within the Polkadot ecosystem.

The Phala Network is a decentralized protocol for cloud computing, seeking to compete with conventional cloud services like Amazon AWS or Google Cloud. Cloud computing involves managing extensive online data stores that offer computing resources—such as data storage and processing power—to users. 

The Phala network utilizes surplus capacity from regular computers, establishing a more dispersed approach to cloud computing and storage. Its objective is to deliver these services via a globally distributed network of computing resources, capable of scaling for better performance while prioritizing confidentiality and security.

Phala achieves this through two kinds of participant "worker nodes" that facilitate its operations:

• Gatekeeper nodes handle interactions among Phala network users and other blockchains, overseeing the blockchain's state and consensus rules.

• Miner nodes engage in a CPU network, taking on various computational responsibilities by leasing their computing power to the network.

Employing these two node types in the Phala network helps segregate consensus and computation duties throughout the system. Additionally, the Phala team introduced Khala (PHA) on the Kusama network to establish a cloud computing network. Khala successfully secured the fourth parachain slot auction in July 2021.

Who are the founders of Phala Network?

Established in 2018 by the Phala Network Foundation, Phala is under the guidance of ex-Google Software Engineer Hang Yin and former Tencent Product Manager Marvin Tong, among other leaders.

Since 2019, the Phala Network Foundation has successfully gathered $1.68 million through two rounds of private token sales, allocating 15% of the initial token supply to investors. Additionally, the project secured three grants from the Web3 Foundation. The PHA crypto token was introduced initially as an Ethereum token in September 2020 and later as a Kusama token in 2021.

How does the Phala Network operate?

The Phala Network operates by allowing individuals to participate in the network by utilizing their computers as nodes. These nodes, hosted on individuals' computers, offer computational resources that clients can harness for their cloud computing requirements.

When a client needs computation performed on the Phala Network, their files are encrypted and dispatched to a node operator's computer. Once received, the files undergo decryption within the secure Trusted Execution Environment (TEE) of the processor, where the computation occurs. The results are then encrypted again and returned to the client. The TEE, residing within the main processor, ensures the security and privacy of computations. Even the owner of the computer hosting the computation lacks access to the data processed within the TEE.

The Phala Network consists of two primary node types: Miner nodes and Gatekeeper nodes. Miner nodes are operated by individuals offering their computer hardware for client use, while Gatekeeper nodes uphold end-to-end encryption between clients and the Miner nodes' computers. This encryption ensures continual privacy, safeguarding information outside the TEE of Miner node processors.

The code executed by employing the Phala Network remains private and exclusively accessible to the client initiating the code. Individuals and blockchain platforms commonly utilize the network for executing smart contract codes for transactions requiring confidentiality. Both Miners and Gatekeepers must stake PHA tokens within the network to run a node. In the event of misconduct, the tokens staked are subject to slashing, reducing their value.

Where is PHA Utilized?

PHA token serves as the inherent token within the Phala Network, functioning as a utility token enabling various operations, from transaction payments to facilitating roles as a Miner or Gatekeeper on the network.

• Usage in Phala Network Services: Those contributing as Miners, offering their computer hardware for Phala Network usage, and Gatekeepers, responsible for network security, require PHA tokens to fulfill their responsibilities. Both parties are required to stake PHA tokens to provide services within the Phala Network. 
  This staking mechanism serves as a financial incentive for their diligent work, as any negligence might lead to a reduction in their staked tokens. Additionally, both Miners and Gatekeepers receive rewards in PHA tokens.

• Transaction Settlements: PHA tokens serve as the payment method for all transactions conducted on the Phala Network. Users leveraging the network's cloud computing capabilities pay for the services in PHA tokens. Simultaneously, Miners offering their computer hardware capabilities are compensated in PHA tokens when users utilize their hardware.

• Network Governance: Furthermore, PHA tokens play a pivotal role in governing the network. Similar to numerous blockchain-based organizations, the Phala Network's governance involves its community, specifically PHA token holders. 
  Community members can propose changes to the network, and PHA token holders participate in voting on these proposals. Proposals receiving over 50% of the total votes cast are implemented within the network.

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