Zilliqa is abandoning its status as an independent layer 1 blockchain to become an Ethereum layer 2 tailored to regulated institutions. The new network, called the Zilliqa Institutional Layer, will process transactions only from verified participants, with identity checks conducted through the Liechtenstein Trust Integrity Network and the issuance of vLEI credentials. The project cites depleted funding, low usage, security challenges and unsustainable economic models affecting standalone layer 1 blockchains. The ZIL token is unaffected by the transition, and holders are not required to take immediate action, while technical migration details will be released later. The shift could attract regulated market participants, but restricting access to a permissioned network excludes the open user base on which many crypto networks depend.
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