Zilliqa Ends Nine-Year L1, Rebuilds as Ethereum (ETH) Layer 2 for Institutions

Nine Years, Then Ethereum

Zilliqa has told the exchanges that list its ZIL token and the users staking it to stand by: on Thursday, November 5, the team announced it will retire its independent layer 1 blockchain and rebuild the network as an Ethereum (ETH) layer 2. Nothing changes for ZIL holders today, the team said, and the token survives the move; what has to move instead is the infrastructure around it, from listings to staking contracts, and the technical details for both are still to be published. The new network, named the Zilliqa Institutional Layer, is built for regulated institutions and carries identity and compliance checks at the protocol level rather than leaving them to off-chain paperwork. No migration date has been set.

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The team’s statement on X is blunt about why the pivot happened. Zilliqa spent nine years building and running its own chain, and, in the team’s words, “it hasn’t worked.” Usage never reached the scale a standalone network needs, funding and liquidity for independent layer-1s dried up, and a string of recent hacks showed how much it costs to secure a blockchain alone. Zilliqa launched its mainnet in January 2019 as a sharded network that split transaction processing across parallel groups, then pushed a refresh to Zilliqa 2.0 on proof of stake. Neither produced the activity an independent chain requires. The new design inverts that model: transactions are processed outside the base chain, while Ethereum (ETH) sits underneath as the settlement and security layer, its liquidity included. In practice, the team wrote, the rebuilt network stops fighting alone and joins the wider Ethereum scaling stack. The team framed the pivot in economic terms, not as a call on the Ethereum price, which the statement never mentions. “We’re not giving up,” the post closes. “Zilliqa isn’t going away.”

Liechtenstein Runs the Sequencer

The compliance problem the new network attacks is simple: on a public chain, a wallet address says nothing about the legal entity behind it. A regulated firm cannot confirm who its counterparty is, or whether the person moving funds is authorized to act for that firm. The Zilliqa Institutional Layer addresses this with vLEIs, verifiable digital credentials built on the international Legal Entity Identifier standard; they let the network verify both a company’s identity and the authority of the individual trading on its behalf, using cryptography rather than documents. Verified entities get their wallets added to an allowlist, and only allowlisted wallets can trade, in a permissioned market where the transaction record stays public and auditable. Access opens to institutions first, with individuals and AI agents to follow later.

Liechtenstein’s state-backed trust network, the Liechtenstein Trust Integrity Network, sits at the operational center of the design. Telecom Liechtenstein, the country’s state-owned telecom operator, holds 51% of the organization, in which Zilliqa itself is a major shareholder; the two have cooperated on digital infrastructure before. LTIN will run the sequencer, the component that orders and batches transactions on the new layer 2, and plans to issue vLEIs to participating institutions as a qualified vLEI issuer, a certification it is still working to obtain. That sequencing role matters: a layer 2 inherits the base chain’s security for settlement, but whoever runs the sequencer controls transaction ordering in the interim, so placing that function with a state-backed entity is the team’s answer to institutional trust requirements. On continuity, the team says partnerships, the community and the single ZIL token are all kept. Any claim, swap or migration guide will appear first on Zilliqa’s official website, and users are warned that anything announced elsewhere “is not real.”

The move reads as a judgment about security economics: a standalone chain must fund its own validators and audits, while a layer 2 rents security from a base layer that amortizes that cost across thousands of applications. Zilliqa’s team effectively conceded it could not carry that budget alone after nine years, and for Ethereum each such migration converts a competing security budget into demand for its blockspace and settlement. What has not moved yet is the market plumbing around ZIL: no migration date exists, no exchange listing changes have been announced, and no staking unwind schedule is public. The concrete next steps are LTIN’s qualified vLEI issuer certification and the pre-migration technical details the team has promised.