Discover Acala (ACA) the DeFi hub from Polkadot =

Acala is a DeFi network with high expectations for the rollout of the project on December 18, 2021. This has everything to do with the project Acala (ACA) is related to: Polkadot.

A project launch is of course always something to follow if you want to become successful in crypto investing. This can be the moment that you can step into a project that can become mega in size. Acala is one such project which could become very interesting in the very near future. It offers something that in many cases is still missing between all blockchains: interoperability. This has everything to do with Acala’s relationship with Polkadot.

What is Acala and why the great interest in this project? Read the complete explanation about Acala Network in this blog.

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  • View quickly
  • What is Acala?
    • Polkadot parachain
      • Parachain Auctions
      • Sister Karura
  • So what exactly are Acala’s products?
    • development possibilities
  • Blockchain technology behind Acala
  • ACA token
  • Acala rollout and token distribution
  • Team and board
  • Acala Ecosystem
  • Conclusion

What is Acala?

As mentioned earlier, interest in this project is high. We already dropped the word that makes this come: Polkadot. The crypto investors who have been in crypto for a number of years have undoubtedly heard of this project. This blog by my colleague already explains what Polkadot is. We are now going to explain what this is related to in the case of Acala Network.

On the Acala Network site, this project is presented as Polkadot’s DeFi hub. A hub is a center or central network. So Acala is part of Polkadot as a DeFi protocol. Polkadot is receiving a lot of attention, especially in the last quarter of 2021. This is due to the many projects, including Acala, that run with the help of Polkadot and are affiliated with it. What is the strength of this platform?

Blockchain offers many solutions in the field of security and decentralization, but it also has a few downsides. For example, the communication between different blockchains or transactions, in short interoperability, between the different blockchains is a problem. This makes Polkadot the right project in the right place in crypto history. Polkadot enables interoperability between the different blockchains. This is made possible by Polkadot’s parachain invention. In this article you will find a detailed explanation of what parachains are and why they are so important.

acala.network

Polkadot parachain

Acala also runs on a Polkadot parachain. A parachain is an independent chain that is connected to Polkadot. These parachains enable developers to build interoperable applications. A total of 100 Polkadot parachains can be used for projects. Kusama is an example of this and now Acala is too. Acala is an ecosystem built on a parachain inherent in the polkadot reĺay chain . The parachain is completely optimized for its specific task. In the case of Acala, it is to facilitate defi applications.

The relay chain is Polkadot’s main chain. This ensures the joint security of the network, consensus and transaction agreements. Each parachain is integrated with the relay chain and therefore also with these features. You can also see the Polkadot relay chain as the great connector, because this means that all parachains are in contact with each other.

Do you want to know more about Polkadot (DOT)? In the video below from AllesOverCrypto, Matt explains everything about Polkadot!

 

Parachain Auctions

Such a parachain, or a spot on a parachain, is rented out to a project for a period of two years. These places are auctioned through an auction . The launch of Acala started with the parachain auction in November 2021. The launch of the project will take place via a so-called parachain auction from Polkadot . A number of parachain projects will be auctioned. Whichever project generates the best returns is the winner. In November 2021, Acala was the winner.

As an interested investor you can ensure that a project can get its place on the parachain by investing through Crowdloan. For this you needed DOT in your wallet and you have to deposit it at a Crowdloan site. After the rental period has expired, you will receive your investment back. In addition, at Acala you will receive ACA tokens as a reward for your investment.

Through Crowdloan, almost 24 million DOT had been deposited by investors. With this, Acala won a spot on Polkadot’s parachains with a few more projects.

Sister Karura

In its launch and capabilities, Acala is related to Karura. This project is called the sister of Acala by Acala and her team. But if you had to follow the story of the family tree of which Polkadot is the progenitor, Karura is more like the “brother from another mother.” Because Karura, like Acala, is a DeFi hub, but from network Kusama. The latter is presented as the wilder and, above all, faster cousin of Polkadot. They are both built in the same way and are also interoperable with each other. Kurama pretends to be faster Acala and Kasura offer the same capabilities, but with a different network.The development of the two projects is parallel and they are both presented on the Acala site.

polkadot.network

 

So what exactly are Acala’s products?

In December 2021, all the capabilities that Acala wants to offer in DeFi will be put into operation. What can you find within the network in the very near future?

Stablecoin aUSD – Stablecoins have unique properties, they are linked to the price of a fiat. aUSD is pegged, i.e. tied, to the price of the dollar. The advantage of this is that a stablecoin is much less volatile than other cryptocurrency, where the price is determined, for example, by the demand for the currency. This makes a stablecoin suitable for mainstream implementation in the everyday economy.

The uniqueness of the aUSD is that it is interoperable with all of Polkadot’s parachains. The tokens that users can deposit for minting as collateral are the tokens of the Polkadot ecosystem. They can use this to take a CPD position. This is a secured debt position. Users can provide collateral in tokens and receive the stablecoin aUSD for this.

Staking – On Acala it is possible to stake from tokens, initially DOT. With the tokens you hold and deposit for providing liquidity to the ecosystem, you are rewarded with rewards. For your investment you will receive L-asset tokens as proof. So if you stake DOT, these are L-DOT tokens. You can reinsert these or use them in other protocols.

DEX with Acala AMM – On the Acala ecosystem comes a decentralized exchange and swap to swap tokens. This has an AMM, an automatic market maker, that automatically links supply and demand and maintains liquidity.

development possibilities

Acala is an ecosystem that also offers plenty of opportunities for projects to develop. Acala thus encourages to build projects on the ecosystem. A special program has also been developed for this purpose, for which developers can register. Developers can use the Acala ecosystem in several ways:

  • Developing a permissions protocol aka runtime models/pallets on the Acala network.
  • Developing permissionless smart contracts using Solidity on Acala EVM. You may know EVM as Ethereum’s development platform for Smart Contracts. Acala has developed an EVM so that smart contracts developed on Acala remain interoperable with Ethereum (ETH). Despite high gas fees and lack of scalability, Ethereum remains the leading smart contract platform with several unrivaled features and position. Acala therefore does not want to match Ethereum, but to ensure that what the developers develop on the Acala ecosystem remains interoperable with Ethereum.
  • Developing smart contracts using ink!
  • The possibility to build your own chain that is connected to Acala. This can be done by using the cross-chain messaging passing protocol from Acala.

Blockchain technology behind Acala

The Acala network creates the blocks and verifies data and transactions through a Proof of Stake consensus method. The nodes also play an important role in the maintenance and upkeep of the network.

The stablecoin and stakes are currently the main features of the Acala platform. To make it interoperable, safe and function properly, Acala has two different consensus protocols: the Honzon and the Homa protocol.

Honzon – This protocol is used for the Acala stablecoin. It consists of a dynamic system of collateral debt positions, i.e. different deposits of coins as collateral are possible. Furthermore, the protocol has on-chain governance and supportive key players. The last mentioned are the participants of the network, such as liquidators, who keep the network and system safe and operational. For the Honzon protocol and in particular the mechanism, one of the first decentralized stablecoins from Maker DAO was looked at.

Homa protocol – This is a tokenized staking liquid protocol. What does that mean? The protocol should ensure liquidity of staked tokens. This is possible because the protocol offers the possibility for users to make DOT tokens available in a pool. For this you will receive L-tokens that you can use in other DeFI applications. These L-tokens also give a say in the governance of the Acala network.

acala.network

ACA token

This ACA token is the native token of the Acala network . It is primarily a utility token, which means that the ACA gives access to certain services and products in the network. Within the network, the ACA is used for transaction fees on the network, stability fees (these are a type of interest charged on the stablecoin aUSD), but also penalty fees, a type of fine in the event of liquidation. Furthermore, the ACA is also a governance token. This gives you a say in the progress of the project. Furthermore, the ACA tokens are the network’s trouble shooters. Suppose the prices of collateral assets collapse and would no longer suffice as collateral, then ACA tokens are automatically put on the market to sell and thus maintain the balance.

Acala rollout and token distribution

The network is rolling out, as we speak, in December 2021. Token distribution has started from December 18, 2021. The layer 1 platform is put into operation and the following four products are put into use: Liquide DOT staking, aUSD (the decentralized Acala stabelcoin), Acala Swap AMM style DEX, EVM+ environment for developers and liquid crowdloan DOT (LCDOT).

The total supply of Acala tokens is 1 billion. Tokens have been reserved for a number of parties. The distribution is as follows:

  • 49.76% community
  • 20.25% founding team
  • 18.33% early backers (of which 17% is rewards for crowdloan participants)
  • 11.66% for the backers

acala.network

Team and board

The team consists of 23 members. In addition to the four founders, these are a number of developers, marketing people and economists. The team also includes two advisors, Jack Platts of Hypersphere, a major blockchain investor, and Ashley Tyson of Web3 foundation, a blockchain research organization. The four founders are:

  • Betty Chen
  • Bryan Chen
  • Fuyao Jiang
  • Ruitao Su

All four have worked on different blockchain projects. Bette and Bryan Chen are also founders of projects that collaborate with Acala or Polkadot. At the moment, in December 2021, Acala is controlled from the team and the Acala foundation. When the entire project has been rolled out, the board will be democratized and the board will therefore lie with several parties, in particular the community.

Contributors to the team are Laminar and Polkawat. Laminar is an open finance platform in which three of its founders are also founders. Polkawat is Polkadot’s mobile wallet that is suitable for Acala and Kusara.

acala.network

The project currently has 30 partners who help Acala in particular financially to get the project off the ground. Acala has found a number of solid partners who contributed capital or knowledge to many blockchain projects. For example, Pantera Capital is a large crypto investor that has invested in various projects for a long time.

Furthermore, there are 26 partners who will use the Acala ecosystem of the facilities or opportunities for development. This number is growing now that Acala will be launched and rolled out at the end of 2021.

acala.network

Acala Ecosystem

Acala Network has a pretty detailed roadmap. In December 2021, various parts of phase 1 have already been completed or are in progress. Phases 2, 3 and 4 are still fully in the planning phase.

Phase 1 – Crowd loan & genesis

  • Parachain slot auction has taken place
  • The genesis of tokens is in progress
  • The ACA distribution is planned

Phase 2 – Govern via PoA

  • Governance is done via PoA (proof of authority, reaching a form of consensus)
  • Tech verification
  • Enable DOT transaction from Polkadot and Acala
  • Upgrade to enable LCDOT support
  • Claim ACA
  • Claim LCDOT
  • Collateral onboarding
  • Dot treasury donation ceremony

Phase 3 – Govern via council

  • Council governance with democracy
  • Making democracy possible
  • Remove Sudo, this is the super userkey that was used for the network rollout, but is being removed to introduce further democracy.
  • Enable token transfers
  • Enabling primitive protocols
  • Bootstrap plan & sequence
  • enabling EVM+

Phase 4 – Full Democracy

  • Enabling full democracy of the protocol

Conclusion

As you have understood from this story, Acala is a project that can rightly be called promising. It has a solid technological background and Polkadot as a basis provides the necessary guarantees. Of course, many DeFi applications are already being offered by various blockchain projects. The interoperability makes this project interesting.

This makes it a project that has our attention and is also discussed in the mastery. If you want to stay informed about the latest trends or are curious about new narratives in crypto, NFTs and DeFi, our crypto mastery is definitely an interesting option.

Want to talk more about Acala or other new projects? You are very welcome in our AllesOverCrypto Facebook group! Our experts are happy to teach you everything about crypto! Find the answer to your question about crypto quickly and easily? Look it up in our FAQ, or google your question + AllesOverCrypto!

 

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