Acala Ecosystem Update — February 2022

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Acala

7 min readMar 8, 2022

aUSD, Acala’s decentralized Polkadot-native stablecoin launch, Acala’s 1-way DOT bridge, 1 million ACA kickoff rewards program, aUSD & kUSD union, Acala at ETH Denver, and Acala ecosystem announcements.

Following a great start to 2022, Acala has ensured strong momentum throughout February. One of the pivotal milestones entering into 2022 was the launch of aUSD — Acala’s decentralized, multi-collateral stable currency, to power the Polkadot and Kusama ecosystems. Acala delivered on the stablecoin, along with other exciting milestones. aUSD minting is live with DOT and LCDOT as collateral assets, and the platform plans to onboard other assets like ACA and other native parachain tokens in the near future.

Read more for additional updates in Acala’s February recap.

aUSD, Acala’s Decentralized Polkadot-native Stablecoin Launch

The Acala team anticipated a need for all future parachains on the Polkadot network — a decentralized stablecoin. Operations in a decentralized economy require a censorship-resistant stablecoin that can facilitate transactions while maintaining its value; thus, the Acala Team started developing the aUSD stablecoin for the Polkadot and Kusama ecosystem.

After conceiving the idea of a stablecoin, Acala initiated the development of an application-specific blockchain that would support the existence, utility, and success of aUSD — the stablecoin would be at the center of everything in the blockchain. aUSD was officially released and is available to mint using DOT and LCDOT as collateral. aUSD works by minting a stable currency from a basket of reserves allowing users to trade without price volatility.

Acala uses a system known as the Collateralized Debt Position (CDPs) to mint aUSD. The platform utilizes the CPD system, incentives, supply and demand balancing, and risk management strategies within Acala to peg the value of aUSD token to the US dollar. aUSD also offers an on-chain liquidator, removing third-party centralized risk, allowing aUSD to manage risks efficiently and autonomously.

Find out more on the aUSD release here.

Acala Enables 1-way DOT Bridge

Another essential launch was the 1-way DOT bridge that supports DOT transfer to Acala. The launch was part of Acala’s roadmap strategy, which uses a phased approach to account for technical dependencies on Polkadot. The timely release of the 1-way DOT bridge enables DOT transfers to Acala as users wait for Polkadot to complete their cross-consensus communication solution, XCM. Releasing the DOT bridge was crucial to Acala as its financial infrastructure revolves around DOT.

The interim solution will be essential for the upcoming DeFi protocols and liquidity incentive programs as users can now start transferring their DOT to Acala. On using the 1-way DOT bridge, Acala advises only the most DeFi-savvy supporters to participate in the early adoption phase, as users will only exit with their liquidity once the platform is fully enabled. As the name suggests, users can only transfer DOT into Acala.

Learn more about Acala’s 1-way DOT bridge in our announcement article.

1 Million ACA Kickoff Rewards Program

Acala users enjoyed another rewards program following the initiation of the Acala DeFi economy. The Acala DeFi foundation allocated 1 million ACA in liquidity mining incentives to encourage LPs for LCDOT/DOT, LCDOT/aUSD, and ACA/aUSD in Acala Swap. Acala Swap is among the core components of aUSD, built as an automated market maker (AMM) in the Acala ecosystem. The AMM powers the liquidation that enables the function and operation of aUSD within Acala. Therefore, the initial listing of the aUSD pairs will help invigorate the Acala Dollar Stablecoin following its launch. For six months, LPs will earn rewards for participating in Acala Swap, with the platform planning additional trading pairs as Acala includes more tokens in its ecosystem. Read more about the 1 million ACA reward program here.

aUSD & kUSD Union

aUSD and kUSD are both Acala stablecoins, with the only difference between the two being their launch networks, i.e., Acala and Karura, respectively. The existence of both stablecoins creates a problem of efficiency, which impedes the capital efficiency, liquidity, and utility of Acala’s stablecoin by fragmenting their services between two networks. An additional drawback was the lack of connection between the governance system in Acala and Karura. Given how close aUSD and kUSD are, decision making should involve members of both communities to influence decision making concerning the stablecoin.

Understanding these challenges, the following solutions are in discussion to support Dotsama with aUSD:

A stablecoin upgrade focusing on the Acala Dollar, allowing aUSD to serve both the Acala and Kusama ecosystem as the native Dotsama stable currency.
The addition of the Karura parachain as a council member in Acala governance to closely align Acala and Karura’s network and participants.
The donation of tokens from the Acala Treasury to the Karura Treasury in the form of KSM tokens to further bootstrap a native Treasury for Karura.

Learn more about the aUSD and kUSD union here, and watch Dan and Bette share more details on an episode of Live with Acala:

Acala at ETH Denver: Workshop Deploying Customer dApp on Acala EVM+, Bounty Rewards

Acala participated in the ETH Denver BUIDL week, which featured a workshop for deploying dApps on Acala EVM+. The workshop tackled the utilization of Acala’s EVM+ and the benefits that arise from using it. Through Acala’s EVM+, users can:

Use Ethereum toolsets like Metamask and Truffle
Issue self-serviced loans
Become liquidity providers,
Earn high-interest APY on their tokens
Enjoy custom chain-level features such as Scheduler, which supports flexible fees, on-chain auto-scheduler, native cross-chain capabilities, on-chain governance apparatus, and full upgradeability without contract migrations.

Additionally, the workshop featured a bounty reward program with objectives from the workshop discussions. The first bounty requires participants to deploy a dApp on Polkadot using Acala EVM+; the reward is $1000. In the second bounty, the objective is to deploy a dApp on Acala EVM+ that integrates with Acala’s decentralized stablecoin (aUSD); $4000 was the bounty reward.

Submissions for bounties are open until March 30. For more details on how to submit your project and qualify for up to $5000 in rewards, see here.

Acala Ecosystem Announcements: Capx, IndexZoo, GameDAO, and Rand

More blockchain solutions joined Acala’s ecosystem in February to leverage practical tools available in Acala. Here’s a quick summary of the projects that joined Acala:

Capx — The innovative platform helps unlock the liquidity of vested tokens by allowing projects to issue Wrapped Vesting Tokens (WVTs) to their stakeholders. CapX decided to launch their token lifecycle management platform on Acala to leverage the aUSD stablecoin and the DeFi ecosystem built around Acala. It gets better. Projects launching on Acala will benefit directly from Capx as they will have access to Capx Liquid for their token lifecycle management.
IndexZoo — The multi-chain future is coming to fruition, and IndexZoo is preparing to onboard the incoming wave of crypto enthusiasts. It is developing a standardized investment platform that exposes users to multiple blockchains through its Composite Index Token and Leverage token. IndexZoo chose to deploy on Acala to leverage aUSD and the holistic DeFi ecosystem built around Acala. Users will have access to the leveraged coins of DOT and ACA, which will feature on Acala’s decentralized exchange and Acala Swap listings. The benefits get better; users will enjoy investment against market volatility, ensuring maximum capital efficiency for their investments.
GameDAO — The platform is adding a community-owned operating system for fundraising, metaverses, e-sport, videogame ownership, and the creative industry to Acala users while leveraging the Acala ecosystem and the aUSD stablecoin. GameDAO ushers in an ERA of transparent governance, community ownership, and interoperable communities through DAO, DeFi, and NFT protocols that transform the gaming industry. Launching on Acala will give GameDAO access to Acala’s DeFi ecosystem, DeFi-customized blockchain, and strong liquidity, allowing GameDAO to develop organically within Acala.
Rand — Another innovative brand to declare their launch on Acala is Rand. The platform brings its practical yield aggregator application to Acala, utilizing Acala’s EVM+ feature to generate income for their users by leveraging the aUSD stablecoin yield. Rand plans to incorporate more elements from Acala to enable liquidity, integration, and frictionless ways for Rand users to benefit. Rand users will gain from the core features of the platform; Public Vaults and Private Vaults.

Users can learn more about Capx, IndexZoo, GameDAO, and Rand by following the respective links.

If you’re a team looking to build with the aUSD stablecoin or looking for support from Acala Grants, please get in touch with our team to chat about how we can support you.

About Acala

Acala is an Ethereum-compatible smart contract platform optimized for DeFi and scaling DApps to Polkadot. The blockchain has built-in DeFi protocols for application developers to leverage, including a decentralized stablecoin (Acala Dollar — aUSD), a trustless staking derivative (liquid DOT — LDOT), and a decentralized exchange.