Acala Network: Bringing stablecoin to the Polkadot ecosystem

What is Acala?

Acala is a DeFi hub with its own decentralized stablecoin called aUSD which will allow users to transfer value pegged 1:1 to USD across any blockchain within the Polkadot ecosystem.

Honzon: The Stablecoin Protocol

Sometimes, Acala is called Polkadot´s MakerDAO. The truth is that MakerDAO inspired the Honzon stablecoin protocol. But it has improved the CDP liquidation process and it fits well in the Polkadot ecosystem.

Acala Dollar (aUSD) characteristics:

  • Stable currency— multi-collateralized stablecoin pegged 1:1 to US Dollar
  • Multi-collateral backed — aUSD will be backed not just DOT and KSM, but also BTC and ETH
  • DeFi — earn interest by lending aUSD to several different DeFi protocols across Polkadot protocol
  • Trading — by Substrate-based nature of Polkadot parachains, aUSD can be traded cross-chain through various DEXes
  • Security — aUSD will be secured by Polkadot’s shared security model

Homa: The Tokenized Staking Liquidity Protocol.

Homa is the second protocol of Acala Network and it focused on liquid staking. What does that mean? Homa protocol enables a user to tokenize the staked cryptocurrency and against it mints L-assets, which could be used for providing liquidity among the DeFi in the Polkadot Network.

L-assets have several usecases:

  • Staking rewards distribution — L-assets holders receive the staking rewards 1:1 to the underlying token (DOT, KSM)
  • Trading — L-assets can be traded across all chains on the Polkadot Network
  • DeFi — with L-assets, users can provide liquidity or lend it to some Polkadot DeFi platform
  • Derivates — can be used in the future markets of the staked asset (DOT, KSM)

Karura — the Canary network of Acala

Tokens

Due to the fact that Acala is launching its canary network Karura, there will be present various different cryptocurrencies within the network.

  • ACA (for Acala) and KAR (for Karura) are the governance tokens — think of them like MAKER for MakerDAO protocol
  • L-DOT, L-KSM — it’s the liquid form of DOT and KSM, that can be traded on DEXes while the original token is staked
  • aUSD, kUSD — stablecoins in Acala and Karura— similar to DAI for MakerDAO
  • Wrapped BTC coins RenBTC, potentially also PolkaBTC from Interlay (in progress)

Conclusion

Acala is one of the most mentioned projects within the space. It has two main goals to achieve. First is releasing the algorithmic multi-collateral stablecoin aUSD, rated 1:1 to US Dollar. And the second goal is to run Acala DEX, which will use aUSD for trading various tokens, similarly to Uniswap trading using DAI.

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Polkadotters | Kusama & Polkadot validators

Polkadotters | Kusama & Polkadot validators

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Czech bloggers & community builders. We are validators of Polkadot, Kusama, Darwinia, Crab, Bifrost, HydraDX, StaFi, Centrifuge under the name: POLKADOTTERS