Acala Introduction
A concise introduction.
Acala is a decentralized liquidity blockchain that offers unified liquidity and built-in cross-chain capabilities. Acala’s key products, LDOT and Euphrates, exemplify its mission by providing a liquid staking solution, a liquidity distribution platform, and a liquidity center ideal for building robust decentralized applications. These solutions empower users globally to stake assets, maintain liquidity, and participate in a variety of financial activities.
Assets
Liquid DOT (LDOT): Acala's Liquid Staking DOT protocol, LDOT, allows users to stake their DOT and receive LDOT in return. This unique asset represents the staked DOT plus accrued rewards, providing users with liquidity and enabling active participation in the ecosystem’s financial service
Acala Token (ACA): the native token of Acala network. Serving as the governance and utility token, ACA is pivotal in regulating network parameters and acting as the transaction fee token within Acala. ACA underscores Acala’s decentralized governance framework, allowing stakeholders to guide the platform's evolution.
aSEED (formerly aUSD): aSEED is Acala's upgraded asset, converted from aUSD. It provides users with the flexibility to exit existing holdings or engage in future growth of Acala's active aUSD treasury. Holders of aSEED can redeem the underlying assets once the redemption criteria is set by governance.
Liquid Crowdloan DOT (LCDOT): LCDOT is a token that represented the DOT locked during Acala's crowdloan. It provided users with liquidity while their DOT was staked in the crowdloan, enabling them to participate actively within the ecosystem. Holders of LCDOT either had their DOT automatically airdropped to them or could convert their LCDOT back to DOT at a 1:1 ratio using the designated portal.
The Liquidity Layer of Hybrid Finance
As a liquidity-focused blockchain, Acala empowers users to unlock the full potential of their digital assets. Acala’s cross-chain capabilities and robust infrastructure enable the integration of diverse assets, making them available for institutions, projects, and individual users. Acala facilitates seamless interactions across various blockchains and applications, enhancing asset utility and user engagement.
Euphrates: Diverse Financial Opportunities
Euphrates offers a range of financial opportunities for its users. It serves as a one-stop shop for users seeking financial opportunities and for developers aiming to boost liquidity to their applications or protocols. For users, Euphrates offers the ability to support various protocols with their capital and earn native ecosystem rewards and ACA from Acala. For developers, it provides a robust distribution platform, fostering a vibrant and incentivized financial environment.
The Homa Protocol: LDOT
The Homa Protocol empowers users within crypto ecosystems by allowing them to maintain the liquidity of their staked assets, creating financial opportunities without sacrificing staking rewards. Liquid DOT, or LDOT is the current product live using the Homa Protocol. Users can employ LDOT in liquidity pools or use it as collateral in decentralized finance applications, which increases capital efficiency and enables the development of new financial products. Additionally, LDOT plays a critical role in decentralized finance, driving ecosystem growth and fostering innovation.
Acala Token Emissions and Burns
The total supply of ACA is capped at 1.6 billion tokens. Acala Network will emit 100 million ACA annually for up to six years. Half of these emissions will be allocated to ACA staking, encouraging active participation, while the other half will be directed toward yield farming in liquidity pools, supporting DApps on the Universal Asset Hub (UAH), Euphrates, and other initiatives aimed at boosting liquidity and adoption.
Additionally, the network will regularly burn 1% of any unspent emissions each month, along with 20% of the accumulated network fees. These actions, which are subject to governance adjustments, have the potential to make ACA deflationary over time, thereby enhancing its scarcity and value proposition.
Network Security
Acala leverages Polkadot’s robust security protocols for block validation and finalization, ensuring a high level of integrity and decentralization. The network is maintained by collators who facilitate the processing of transactions and state transitions, ensuring the network's continuous operation. Acala inherits trustless bridge between itself and Polkadot as well as all connected parachains using cross-chain message passing (or XCM).
Collators
Acala blockchain is maintained by collators, who maintains a full node, collects parachain transactions from users and producing state transition proofs for Polkadot validators. In other words, collators maintain parachains by aggregating parachain transactions into parachain block candidates and producing state transition proofs for validators based on those blocks.
Acala blockchain is secured by the Polkadot Relay Chain, and kept alive by the collators. Unlike validators, collators has nothing to do with security of the network, by being a parachain, the network is by default trustless and decentralized, and a parachain only needs one honest collator to be censorship-resistant. Read more on Collators here.
Parachain Slots
Polkadot has a limited number of parachains. It uses an auction mechanism to allocate parachain slots where the DOT tokens are used for bidding. A parachain can lease the slot for up to 2 years on Polkadot (1 year on Kusama). Acala has been building an on-chain Treasury of DOTs (network-controlled-value) to ensure it is self-sustainable. This is also the magic behind ACA being a fixed supply non-inflationary network token.
Emergency Shutdown
In extreme cases, Acala can implement an emergency shutdown through its governance system to protect the network and its users. This mechanism ensures that all operations are decommissioned systematically, safeguarding assets and stakeholder interests.
Conclusion
Acala continues to push the boundaries of DeFi by providing innovative liquidity solutions and promoting a secure, integrated, and user-centric blockchain environment. LDOT and Euphrates play a central role in this strategy, enabling broader participation and fostering the development of the crypto finance landscape.
Last updated