Acala 2.0: The Exodus Upgrade to Build the Liquidity Layer for Web3 Finance

Published in

Acala

4 min readSep 13, 2023

We’re thrilled to unveil the Acala Exodus Upgrade, a monumental leap in our journey to redefine the Web3 finance landscape with the goal of building the liquidity layer for Web3 finance. This comprehensive plan promises to redefine the Acala Network protocols, ensuring long-term growth and self-sustainability. Let’s unpack what’s in store.

Why the Exodus Upgrade?

The story of Exodus is a metaphor for our journey. Just as Exodus symbolizes courage, liberation, and resilience in facing challenges on the way to freedom, we are determined to break free from traditional finance molds and carve new paths forward.

Exodus Upgrade’s comprehensive overhaul aims to:

Provide a clear path for the aUSD product line.
Establish a robust liquidity layer necessary for the Web3 finance landscape.
Expand the utility and role of the ACA token in the network’s growth.

aUSD Conversion to aSEED

We aim to provide a path forward for aUSD participants with options to exit existing aUSD holdings/vaults or to participate in Acala’s future growth by converting aUSD to aSEED at a 1:1 ratio, and CDP vaults to aSEED treasury. Liquidity Venues of aSEED can be found on Acala Swap, Stellaswap, Karura Swap and Zenlink.

A CDP vault conversion pallet and redemption proposal are set to be delivered next. The vault conversion pallet can take a % of the collateral in a vault, convert it into the aSEED treasury and return the remaining collateral to the vault owner. The formula for the conversion can be found here. The redemption proposal will solidify the set criteria in which aSEED holders can redeem underlying assets.

The introduction of new vault conversion mechanisms ensures that vault owners have flexibility and control as every aspect is designed with the user’s value in mind.

Robust Liquidity Layer

Liquidity is the life force of decentralized finance. The Universal Asset Hub (UAH) along with our Euphrates Dapp is our masterstroke to bridge the liquidity gaps across blockchains. Whether it’s DOT, other LSTs, or liquidity avenues like USDC/USDT, the UAH and Euphrates enable a unified, robust liquidity landscape.

The UAH is powered by innovative tools like the Acala Multichain Asset Router built on top of the XCM standard and Wormhole protocol using Substrate and Acala EVM+. This ensures seamless liquidity across platforms that use both Substrate token formats and EVM token standards with plans to expand in other notable standards in the future. With the goal of fostering an LSTFi ecosystem, the future is rife with possibilities for developers and users alike.

Euphrates will amplify user rewards by allowing stakers and liquidity providers of LSTs to earn boosted rewards in the form of ACA as well as participating project token rewards. The introduction of Euphrates will be deployed with DOT-based LST liquidity vaults, and later expanded to support Ethereum and other multichain LST liquidity vaults. This will open up opportunities for DOT holders to get exposure to Ethereum LSTFi and vice versa.

Renewed ACA Tokenomics

With the growth of the Acala Network, ACA’s role is set to undergo a transformative change. With new utilities, from staking to dynamic voting, ACA holders are in for a more engaging and rewarding experience.

ACA holders can now play a more active role in the network’s growth with the launch of ACA Staking and farmable token contributions. Voting on decisions for LP and Dapp emission distribution, shortfall event ACA mitigation and much more will be in the hands of active ACA holders.

New provisions for emissions and burns have been set to create a balanced ecosystem. Through governance approval, there is now a total of 100 million ACA emitted per year for 6 years with 50% of the emissions reserved for ACA staking and 50% to help build liquidity and adoption. This can be seen in the form of yield farming for liquidity pools, dApps built on the Universal Asset Hub (UAH), and other avenues. ACA burns will happen periodically through unspent emissions, governance votes and portions of network fees.This overtime may make ACA deflationary.

Final Thoughts

Beyond liquidity, Acala aims to foster a LSTFi ecosystem that encourages innovation and adoption. Leveraging Acala’s EVM+ dApp platform along with the enhanced ACA tokenomics, a promising horizon awaits both developers and users, brimming with opportunities and rewards.

Join the Acala Ecosystem

If your team is eager to construct enduring DeFi products and services, and to seamlessly integrate and build atop LSTs, we encourage you to connect with us. Let’s explore how we can empower and assist your initiatives.