Zilliqa said it will stop running as an independent blockchain and rebuild as an Ethereum Layer 2 for institutions. The team cites weak adoption, scarce funding and rising security costs. The ZIL token keeps its ticker, but its role in the new network is undefined.
Zilliqa said on November 4 that it will abandon its independent Layer 1 and rebuild as an Ethereum Layer 2 for banks, funds and asset managers. The team links the decision to adoption that never arrived and a security bill it can no longer carry.
ZIL now trades at $0.001645 with a market capitalization of $33.94 million. The token fell 9.7% in 24 hours, taking its seven-day loss to 18.2%.
ZIL trades 99.4% below its 2021 high
ZIL set its all-time high of $0.2563 on May 6, 2021 and now trades roughly 99.4% below it. Circulating supply grew from about 11.5 billion tokens in 2021 to around 20.6 billion today, so each token represents a smaller share of a collapsed valuation.
On adoption, ZilSwap held $239.5 million in user deposits at its May 2021 peak, and DefiLlama now shows about $61,730.
Three security incidents shaped the decision
Zilliqa's explanation states: "running everything on our own has stopped working." The team says funding and liquidity for standalone chains have dried up, while this year's attacks showed how costly it is for a small network to defend itself.
According to Zilliqa's August 20 post-mortem, a flaw in the legacy Ledger app let attackers rebuild private keys, and at least 683.13 million ZIL was stolen from 51 drained accounts. In October, an exposed signing key opened the X-Bridge to Ethereum, and a flaw in legacy ZRC-2 tokens let an attacker mint unbacked tokens.
The new network leans on verified identity
The new network will be called the Zilliqa Institutional Layer. Participants will use verifiable Legal Entity Identifiers, and the Liechtenstein Trust Integrity Network, majority-owned by Telecom Liechtenstein, will issue the credentials and run the sequencer.
Open questions remain. Zilliqa has not said whether institutional fees will be paid in ZIL, whether staking survives, or whether trading revenue will reach tokenholders. No bank or asset manager has been named as a launch participant, and the team says holders do not need to act until it publishes further instructions.
Source: Crypto News Flash
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