Choose Rich Live
Crypto News

Zilliqa pivots from standalone layer 1 to Ethereum layer 2 for institutions

After nine years operating its own blockchain, Zilliqa plans to abandon its standalone layer-1 network and relaunch as an Ethereum layer 2 tailored for regulated institutional users.

Text announcement stating 'Zilliqa is becoming an Ethereum Layer 2' and detailing its focus on institutional reach and compliance.
Image: @TheBlockCo

Zilliqa is dropping its standalone layer-1 blockchain to transition into an Ethereum layer-2 network focused on regulated institutions, according to reports from The Block and Crypto Banter. The project stated that nine years of running its own layer-1 chain "hasn't worked," pointing to weak user activity, drying liquidity, and security challenges.[2][3]

The upcoming network, dubbed the Zilliqa Institutional Layer, will rely on Ethereum for settlement and embed identity and compliance into the network via verifiable Legal Entity Identifiers (vLEIs). Under the design, transactions will initially be restricted to verified participants in a permissioned market.[1][2][3]

The pivot follows recent security incidents that compromised Zilliqa's X-Bridge and selected ZRC-2 tokens, resulting in roughly $800,000 stolen, though native ZIL and the network's EVM environment were not breached. Zilliqa will retain the ZIL token across the shift, with no action required from existing tokenholders.[1][2][3]

Key facts

  • Zilliqa is shutting down its standalone layer-1 blockchain after nine years to transition into an Ethereum layer 2.
  • The project attributed the change to weak usage, drying liquidity, and recent hacks, acknowledging that running its own layer 1 'hasn't worked.'
  • The new network, called the Zilliqa Institutional Layer, will use Ethereum for settlement and vLEIs for built-in identity and regulatory compliance.
  • Access will initially be permissioned and restricted to verified institutional participants.
  • Recent exploits against Zilliqa's X-Bridge and certain ZRC-2 tokens resulted in approximately $800,000 being stolen, while native ZIL and the EVM environment remained secure.
  • The ZIL token will be retained, and current holders do not need to take any action.

Sources · 3 sources

  1. CN

    crypto.news@cryptodotnewsPost on X ·

    JUST IN: Zilliqa pivots to an Ethereum Layer 2 built for regulated institutions. The new Zilliqa Institutional Layer will use Ethereum for settlement and vLEIs for identity and compliance, while $ZIL remains unchanged with no action required from holders. https://t.co/z5aZ72r3fL

    Open source
  2. TB

    The Block@TheBlockCoPost on X ·

    THE BLOCK: Zilliqa says nine years of running its own Layer 1 "hasn't worked" and plans to become an Ethereum Layer 2 for regulated institutions. The pivot follows weak usage, drying liquidity, and recent hacks, with the new network restricting transactions to verified participants while retaining the ZIL token.

    Open source
  3. CB

    Crypto Banter@crypto_banterPost on X ·

    🚨ZILLIQA DROPS ITS OWN L1 TO BECOME AN ETHEREUM L2! After nine years running a standalone chain that never reached the usage, funding or security it needed, @zilliqa is pivoting to the Zilliqa Institutional Layer: an Ethereum L2 built for regulated institutions. Settlement will be secured by Ethereum, with identity and compliance via vLEIs and a permissioned market for verified institutions first. $ZIL token stays. No holder action needed today. This follows recent incidents that hit its X-Bridge and some ZRC-2 tokens, with reports of around $800K taken. Native $ZIL and the EVM stayed safe.

    Open source