Introducing ACA Staking: Enhancing Acala Network’s Sustainability and ACA Utility

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Acala

4 min readOct 15, 2023

ACA Staking is expected to launch after this proposal passes, at block #4,681,500 09:26 Oct 16 UTC~ at the writing of this blog.

The Acala Network is undergoing a significant transformation with the introduction of ACA Staking, an initiative aimed at optimizing network growth, and sustainability, and enhancing ACA’s role as a fundamental utility. In this article, we’ll delve into the key aspects of ACA Staking, the goals it seeks to achieve, the reward structure for its participants, and the impact it will have on the Acala ecosystem.

Aligning Stakeholders and Enhancing ACA Utility

At its core, ACA Staking is designed to align stakeholders, Acala ecosystem participants, protocol functionalities, network infrastructures, ecosystem growth, and ACA’s utility within the Acala Network. By achieving this alignment, we aim to enhance Acala Network’s growth trajectory, ensure sustainability, and solidify the role of ACA as a vital utility.

Key Features of ACA Staking

1. Target APR: The program sets a target annual percentage rate (APR) of 10% for ACA staking, offering participants the opportunity to earn attractive rewards while contributing to the network’s growth.

2. Staking Rate: The target staking participation ratio is around 30% to 50%.

3. ACA Staking Loyalty Bonus: This program is designed to benefit those who commit to farming over the long term. By holding onto your staked ACA without claiming your rewards, you will earn extra ACA through the loyalty bonus. However, if you decide to claim your rewards early, you’ll relinquish a percentage of this bonus. All relinquished loyalty ACA then gets added back to the loyalty reward pool, and is shared among the farmers who continue to hold. In short, the rewards taken from farmers who leave early are dispersed among those who stay, further rewarding for long-term farmers. This mechanism only affects ACA and not other reward tokens earned from other projects in the process.

Unlocking New ACA Utilities

With ACA Staking, the Acala Network introduces a range of new utilities for ACA in addition to its existing functionalities, such as transaction fees and participation in governance proposals. These new utilities include:

- Ecosystem Token Contributions: Staked ACA can be used to farm ecosystem token contributions, providing an avenue for participants to engage and earn.

- Vote for Emission Distribution: Staked ACA holders keep the power to vote for emission distribution to liquidity pools and decentralized applications (DApps), shaping the network’s growth.

- Captive Liquidity: ACA will power incentivized liquidity pools in Acala Swap, fostering liquidity for various trading pairs, including ACA to DOT, ACA to stablecoins, LSDs to DOT, and more.

- Mitigation Tool: A portion of staked ACA (e.g., 20% via governance) can be employed as a mitigation tool in case of a shortfall event within native Acala protocols, enhancing network security. This feature is planned for ACA phase 3 upgrade, and specific parameters will be set via on-chain governance

How to Stake ACA

Access to ACA Staking is available on the main Acala Platform accessible through the staking tab found on the left panel. Staking is as simple as choosing the amount you wish to stake and confirming the transaction in your wallet. Unstaking is found on the same page and requires a 28-day unstaking period before your ACA can be claimed. During that time there will be no staking yield.

The staking dashboard displays useful information such as the current APY, the loyalty bonus accumulated, the balance and status of your ACA, and more. LP token staking is also found on this dashboard if you are partaking in the incentivized liquidity pools.

ACA Emissions and Burns

Acala Network will emit a total of 100 million ACA per year for a maximum of 6 years. Half of these emissions are reserved for ACA staking, incentivizing active participation, while the remaining half will support yield farming in liquidity pools, DApps built on the Universal Asset Hub (UAH), Euphrates and other initiatives driving liquidity and adoption.

Additionally, the network will periodically burn a portion of unspent emissions (e.g., 1% per month) and a percentage of accumulated network fees (e.g., 20% via governance). These measures may make ACA deflationary over time, enhancing its scarcity and value proposition.

Conclusion

The introduction of ACA Staking and the Exodus Upgrade represent significant milestones in the evolution of the Acala Network. These initiatives are poised to align stakeholders, enhance ACA’s utility, and ensure the network’s growth and sustainability. As the Acala ecosystem continues to expand and evolve, participants and ACA holders can look forward to new opportunities for engagement, rewards, and actively shaping the future of DeFi.

Stay tuned for further updates as the Acala Network progresses with these exciting developments. Together, we are building a more robust, sustainable, and decentralized financial ecosystem.