Kujira To Launch on Karura’s EVM+, Providing Effective Liquidations for aUSD.

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Acala

5 min readMar 3, 2022

We are thrilled to announce Kujira will be joining the Karura ecosystem! Kujira will build in the Karura EVM+ environment with the launch of their innovative liquidation solution, ORCA. With ORCA, DeFi users are able to bid on at-risk collateral, making them available for purchase to anyone and providing an effective liquidation mechanism for Acala’s stablecoin, aUSD. Kujira has previously integrated ORCA’s simple, powerful UI and analytics with Anchor Protocol on Terra.

Meet Kujira

Kujira is a team of builders committed to levelling the playing field in crypto. They provide products anyone can use to give them a shot at eliminating the edge afforded to those with access to capital, tech, and other resources out of the reach of your typical retail investor.

ORCA is their liquidation product. ORCA will enable anyone to bid on at-risk collateral in Karura using a simple, powerful UI and analytics.

While liquidations were previously the domain of the few, bidding on liquidated collateral is now a widely available hedging strategy for downturns in volatile markets.

The benefits are a more stable lending system, a reduced risk of cascading liquidations, and a decrease in the cost of getting liquidated to the borrower. These are the net positive effects Kujira brings to the table.

Get to Know Kujira

An effective and reliable liquidation mechanism is critical in the healthy operation of any market involving collateralised lending. As a protocol designed to provide a reliably pegged stablecoin — aUSD — it is as important to be able to liquidate under-collateralized positions, as it is to attract new borrowers to provide a reserve for the currency, in order to maintain the peg.

In the “old” system, there was a reliance on bots and bot operators to be motivated to provide the capital to buy this collateral when it needed liquidating. Markets would offer up to 30% discounts on the current market rate of the collateral, and bot operators would immediately sell it after purchase — at market rate — to lock in profits. This resulted in a few bot owners making huge profits, at the expense of the health of the market. Their selling created continued downward pressure on the price of a collateral asset already dropping.

Kujira opens up these liquidation markets to every DeFi user, providing greater stability to the market. With a queue-based and anti-bot approach, Kujira’s ORCA allows Defi users to purchase these collateral assets at a discount. You simply bid at your desired discount level — from 0% upward — and when the market needs to sell collateral to repay a loan, these bids are filled, from smallest discount to biggest.

The benefits are threefold: 1) The liquidity providing solvency for the market is locked in, and there can be a higher assurance that it will be available for future liquidations. 2) The competitive nature of bidding helps find an optimal discount rate. For example on Terra, the flat rate of 15% has now trended down to a 3–4% average discount. This allows more to be repaid to the market to maintain the reserves. 3) Most importantly, the assets are bought by community members who have myriad strategies, many of whom choose to increase their ownership long-term, as opposed to immediately selling and damaging the market.

Learn more about aUSD

aUSD is a decentralized, multi-collateral, crypto-backed stablecoin soft-pegged to the US Dollar. The Acala stablecoin protocol mints a stable currency from a basket of reserve assets locked as collateral. This enables people to transact, trade, and facilitate services using aUSD without price volatility and, if desired, while retaining ownership of their reserve assets like ACA, DOT, DOT derivatives, parachain assets, and assets bridged from other consensus networks like BTC, or ETH.

First, aUSD’s liquidity will be built up on the Acala and Karura blockchains, then the stablecoin can begin to be integrated into all live parachains and DApps in the Polkadot and Kusama ecosystem. The goal of aUSD is to be the most useful form of decentralized stable currency in the Polkadot ecosystem, serving as the default pair, routing asset, and means of exchange among all users and developers. Achieving this goal will lead to a flourishing ecosystem among the Polkadot parachains, as well as strong value creation for the Acala chain as collateral is locked in the Decentralized Monetary Reserve. As you can see in the diagram below, Acala and aUSD will scale along with the Polkadot ecosystem.

Follow the Integration

The Kujira and Karura teams will keep the community updated on the integration of Kujira, including more education around Kujira’s products, team, and roadmap. You can follow along on the Acala or Kujira Twitter accounts, or any of the social links below.

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 Kujira

Kujira builds Defi dApps for retail crypto users providing them advantages previously reserved for tech elites and whales. Their flagship product ORCA has enabled thousands of Terra users to hedge their investment strategies by bidding on at-risk collateral, giving them an opportunity to benefit from market volatility in either direction. They are continuously incorporating new chains and ways for users of ORCA, and their other products like BELUGA, the chance to one day also become a whale. Their token KUJI is utilized across all their products.

About Karura & 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.