Q1 2025 was a foundational quarter for Phala Network, marked by the launch of Phala 2.0 on Ethereum and the rollout of Phala Cloud. These developments transitioned the network from a Polkadot parachain-based model to an Ethereum Layer-2 that enables access to TEE-based computation. With over 1,000 Confidential Virtual Machines deployed, Phala demonstrated early product-market fit among teams building AI agents and privacy-sensitive applications. The network also grew operationally, with a 72.2% increase in Phala Worker Nodes and a 23.2% rise in delegators following the sunset of Khala.