Is there a way to compile phalcon on a 500Mb system?

You can set up a swap space to increase memory:

https://www.digitalocean.com/community/tutorials/how-to-add-swap-space-on-ubuntu-16-04 (for debian based linux distros)

Or, you could set up a virtual box with the matching OS distro and compile it on your local machine, then upload it to the VPS

EDIT: I've noticed another thread you've posted where you mention you use CentOS 7, check this thread for a repo:

https://forum.phalcon.io/discussion/13265/phalcon-on-packagecloudio

Few ways to do it:

• set a swap
• use zephir to compile it - it will compile each module seprately instead of whole one file
• use ext folder to compile extension(very similar to above, just without zephir)
• install already compiled version