Blockchain project Zilliqa is preparing to retire the independent Layer 1 blockchain it has built and run for nine years and rebuild itself as an Ethereum-based Layer 2 network designed for regulated financial institutions. The proposed system, 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 plan, announced by the project on X on November 5, 2026, marks a significant change in Zilliqa's infrastructure strategy as it seeks to establish a stronger position in the institutional blockchain market. Rather than continuing to operate infrastructure that has struggled to sustain standalone operations, Zilliqa intends to build its next phase of development around Ethereum's established ecosystem.

Zilliqa Says Its Layer 1 “Hasn't Worked”

The project was candid about the reasons behind the move. According to the announcement, usage of the Zilliqa network never reached the level a standalone chain needs, while funding and liquidity for standalone Layer 1s dried up. The team also pointed to recent hacks across the industry as evidence of how much it takes to secure a chain alone, noting that the usage data is onchain for everyone to see.

Zilliqa said it will keep what it described as the strong parts of the project — its partnerships, its community and its single token, ZIL — while cutting what is not working.

The full announcement, posted on X on November 5, 2026:

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 first. If it's not there, it's not real.

Zilliqa isn't going away. We fight another day.

— Zilliqa (@zilliqa) November 5, 2026

Inside the Zilliqa Institutional Layer

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, which 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. The identity component rests on vLEIs — verifiable Legal Entity Identifiers, the cryptographically verifiable form of the Legal Entity Identifier, the standardized identifier used to establish the identity of legal entities in regulated finance.

Zilliqa also plans to introduce permissioned markets where participation depends 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. Access will be extended to institutions first, with individuals and agents to follow at a later stage.

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, an arrangement that can allow projects to focus on specialized services while using larger blockchain ecosystems for transaction settlement and security.

According to the announcement, the sequencer for the new network will be operated by @ltin_li, which is also becoming a qualified vLEI issuer. On a Layer 2 network, the sequencer is the component that orders and processes transactions before they are finalized on the underlying settlement chain — in this case, Ethereum — so placing that role with the state-backed trust network in Liechtenstein ties the network's day-to-day operation directly to its verification-focused design.

ZIL Holders Told to Wait for Official Guidance

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 complete technical specifications or detailed migration procedures, and it has said additional information will be provided before the transition takes place. Tokenholders will therefore need to wait for official guidance on the treatment of existing tokens, migration arrangements, and any technical requirements associated with the new network.

In its announcement, the project stressed that any claim, swap or migration will be announced on first — “If it's not there, it's not real.” General information about the project is published at

The absence of an immediate action requirement gives existing tokenholders 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.

From Singapore Research Project to $22 Million ICO

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 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 the maintenance of 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 its ability to provide reliable compliance infrastructure while leveraging Ethereum's settlement capabilities. Zilliqa has yet to announce a complete technical roadmap or a definitive migration schedule. Further details are expected ahead of the transition as the project prepares to introduce its new institutionally focused blockchain architecture. The near-term markers Zilliqa itself has flagged are the publication of technical details before anything changes, the practical workings of @ltin_li's roles as sequencer and qualified vLEI issuer, and the planned rollout of access — institutions first, with individuals and agents to follow.

Source: CoinTrust