Zilliqa to Pivot From Its Layer 1 to an Ethereum Layer 2 for Institutions

Zilliqa says it is changing direction after nine years of building and operating its own Layer 1 blockchain. In a post on X, the project said it plans to become the Zilliqa Institutional Layer (ZIL), an Ethereum Layer 2 designed for regulated institutions.

The announcement is a strategic pivot, not a detailed launch plan: Zilliqa called it the “first of many next steps” but did not specify a schedule, technical design, or which institutions might use the network.

What is Zilliqa changing?

A Layer 1 is a blockchain that processes transactions on its own network. A Layer 2 operates on top of another blockchain—in this case, Ethereum—with the aim of using that underlying network as its foundation. Zilliqa says its new focus will be regulated institutions, rather than continuing with its own Layer 1 as its central direction.

The project was unusually candid about the reason for the shift, saying its nine-year effort “hasn't worked.” It also said it is not giving up, framing the new plan as the beginning of a broader change rather than a shutdown.

What should users watch for next?

For existing Zilliqa users, this post alone does not explain what happens to the current network, tokens, applications, or validators. Those practical details—and any migration steps—remain unannounced. Users should wait for official instructions before making decisions based on the proposed pivot.

The institutional focus makes the plan distinct from a simple move to Ethereum: Zilliqa says it wants to build for regulated organizations, but has not yet described the features or compliance arrangements that would support that goal. The next meaningful test is whether it publishes a concrete roadmap and explains how the existing ecosystem fits into it.

This pivot comes after a difficult year for Zilliqa. In July 2026, a critical vulnerability in the Zilliqa Ledger app exposed users to private key theft, and the project asked exchanges to pause ZIL transfers after a suspected cold wallet theft. Those security incidents may have contributed to the decision to abandon the original Layer 1 approach.