Zilliqa plans to move away from operating as a standalone Layer 1 blockchain and transition to an Ethereum-based Layer 2 network designed for regulated institutions. The proposed network, called the Zilliqa Institutional Layer (ZIL), will use Ethereum for settlement and introduce built-in identity and compliance mechanisms for verified institutional participants, according to Wu Blockchain.
The decision marks a strategic change for Zilliqa, which acknowledged that activity on its legacy blockchain was not sufficient to support continued standalone operations. Rather than maintaining an independent Layer 1 network, the project intends to build its next phase around Ethereum's infrastructure.
New Network Targets Regulated Institutions
The Zilliqa Institutional Layer is being developed with institutional participation in mind. Its architecture will rely on Ethereum for settlement, while incorporating identity verification and compliance features directly into the network.
Zilliqa also plans to establish permissioned markets for verified institutional participants. This approach would distinguish the proposed network from an environment in which participation is entirely open, by making access to certain markets dependent on participant verification.
The transition reflects Zilliqa's assessment that its existing chain could not sustain standalone operations at its current level of usage. The project has therefore outlined a move toward an Ethereum Layer 2 model rather than continuing with its previous Layer 1 structure.
Tokenholders Await Transition Details
Zilliqa said existing tokenholders do not need to take any action at this stage. The project has not yet released the full technical details of the transition, but said further information will be provided ahead of the move.
That announcement leaves several implementation details to be clarified before the transition takes place. For now, the guidance from Zilliqa is that tokenholders should not take immediate steps in response to the proposed network change.
Zilliqa's Funding and Early Backers
Founded in 2017 by a research team from the National University of Singapore (NUS), Zilliqa raised approximately $22 million through seed and initial coin offering (ICO) rounds between late 2017 and early 2018.
Its major backers included Polychain Capital, FBG Capital and NGC Ventures. Polychain Capital was among the investors associated with the project during its earlier development.
The planned shift to the Zilliqa Institutional Layer represents a move from an independent blockchain model toward an Ethereum-secured network focused on regulated institutional markets. Zilliqa has yet to release the technical specifications, which it says will be made available ahead of the transition.
