Blockchain project Zilliqa is planning to move away from operating its independent Layer 1 network and transition to an Ethereum-based Layer 2 infrastructure designed specifically for regulated financial institutions.
The proposed network, called the Zilliqa Institutional Layer (ZIL), will use Ethereum for transaction settlement while incorporating built-in identity verification and compliance mechanisms for institutional participants. The initiative represents a significant change in the project’s infrastructure strategy as it seeks to establish a stronger position in the institutional blockchain market.
Zilliqa aims to replace its standalone blockchain model with an Ethereum-based Layer 2 network that combines Ethereum settlement infrastructure with identity verification, regulatory compliance, and permissioned institutional markets.
The proposed transition reflects the project’s assessment that activity on its existing blockchain has not reached a level sufficient to justify maintaining an independent Layer 1 network. Rather than continuing to operate infrastructure that faces limitations in sustaining standalone operations, Zilliqa intends to build its next development phase around Ethereum‘s established ecosystem.
Zilliqa Institutional Layer Focuses on Regulated Markets
The Zilliqa Institutional Layer is being designed to accommodate the requirements of financial institutions and other regulated organizations seeking blockchain-based infrastructure.
Unlike conventional public blockchain networks that generally allow unrestricted participation, the proposed system will incorporate identity and compliance controls directly into its architecture. These mechanisms are expected to enable the network to distinguish verified institutional participants from other users.
Zilliqa also plans to introduce permissioned markets where participation will depend on meeting specified verification requirements. This structure could provide financial institutions with an environment better suited to activities that require participant identification, regulatory oversight, and controlled access.
Ethereum will serve as the settlement layer for the proposed network. By relying on Ethereum infrastructure, Zilliqa intends to move away from the technical and operational responsibilities associated with maintaining an independent blockchain while retaining the ability to develop specialized services for institutional customers.
The strategy also reflects a broader shift in the blockchain industry toward application-specific infrastructure built on established networks. Such arrangements can allow projects to focus on specialized services while using larger blockchain ecosystems for transaction settlement and security.
Existing ZIL Tokenholders Await Migration Guidelines
Zilliqa has indicated that existing tokenholders do not need to take any immediate action in response to the proposed transition.
Although the project has outlined its intention to introduce the institutional Layer 2 network, it has not yet published the complete technical specifications or detailed migration procedures.
The company has stated that additional information will be provided before the transition takes place. Consequently, tokenholders will need to wait for official guidance regarding the treatment of existing tokens, migration arrangements, and any technical requirements associated with the new network.
We know it’s not great. For nine years we built and ran our own Layer 1. It hasn’t worked.
We’re not giving up. Here’s the first of many next steps in a new direction:
Zilliqa is becoming the Zilliqa Institutional Layer (ZIL): an Ethereum Layer 2 for regulated institutions.
Usage never reached what a standalone chain needs. Funding and liquidity for standalone L1s dried up. The recent hacks showed how much it takes to secure a chain alone. The data is onchain for everyone to see.
We keep what was great: our partnerships, our community and one token, ZIL.
We cut what isn’t working. We stop fighting alone.
We start with a new identity, a new goal and a new path.
What we are building:
– Settlement secured by Ethereum.
– Identity and compliance built into the network, through vLEIs.
– A permissioned market where verified institutions trade with each other. Institutions first, later individuals and agents.Our partners are even more committed to this future. @ltin_li, the state-backed trust network in Liechtenstein, will operate the sequencer and is becoming a qualified vLEI issuer.
ZIL holders: this move needs no action from you today. We will publish the technical details before anything changes. Any claim, swap or migration is announced on https://t.co/382XLEBa8M first. If it’s not there, it’s not real.
Zilliqa isn’t going away. We fight another day.
— Zilliqa (@zilliqa) November 5, 2026
The absence of an immediate action requirement provides existing tokenholders with time to await formal migration instructions before making decisions about their holdings.
The transition’s implementation details will be important in determining how the existing Zilliqa ecosystem connects with the proposed Ethereum-based infrastructure.
Zilliqa’s Background and Early Funding
Founded in 2017 by a research team associated with the National University of Singapore, Zilliqa entered the blockchain industry with an emphasis on developing an independent Layer 1 network.
Between late 2017 and early 2018, the project raised approximately $22 million through seed funding and an initial coin offering. Its early investors included prominent cryptocurrency investment firms such as Polychain Capital, FBG Capital, and NGC Ventures.
Polychain Capital was among the investment firms that supported Zilliqa during its early development, when the project sought to establish its position in the emerging blockchain infrastructure market.
The proposed transition marks a departure from the independent blockchain model that shaped Zilliqa’s original development strategy.
Institutional Adoption Becomes a Strategic Priority
The planned Zilliqa Institutional Layer highlights the project’s growing emphasis on regulated blockchain applications rather than maintaining a general-purpose standalone network.
By combining Ethereum-based settlement with identity verification and permissioned markets, Zilliqa is seeking to address institutional requirements that may not be adequately served by unrestricted blockchain environments.
The success of the transition will depend on the network’s technical implementation, institutional adoption, and ability to provide reliable compliance infrastructure while leveraging Ethereum’s settlement capabilities.
Zilliqa has yet to announce the complete technical roadmap or a definitive migration schedule. Further details are expected ahead of the transition as the project prepares to introduce its new institutional-focused blockchain architecture.
