Acala - cross-chain DeFi hub and stablecoin based on Substrate for Polkadot and Kusama.

starsStars 154
forksForks 45
watchersWatchers 154
current-versionCurrent version 0.6.2
total-releasesTotal releases 22
open_issues_countOpen issues 48
dateFirst release 2020-02-04
dateLatest release 2020-10-16
updateLast update 2020-12-23

1. Introduction

This project is initiated and facilitated by the Acala Foundation. Acala Foundation nurtures applications in the fields of decentralized finance protocols, particularly those that serve as open finance infrastructures such as stable currency and staking liquidity. The Acala Foundation is founded by Polkawallet , participants and contributors to the Polkadot ecosystem. The Acala Foundation welcomes more industry participants as it progresses.

2. Overview

The significance of cross-chain communication to the blockchain is like that of the internet to the intranet. Polkadot empowers a network of public, consortium and private blockchains, and enables true interoperability, economic and transactional scalability. A cross-chain stablecoin system will:

  1. create a sound, stable currency for low cost, borderless value transfer for all chains in the network
  2. enable commerical lending with predictable risk
  3. serve as a building block for more open finance services

The Acala Dollar stablecoin (ticker: aUSD) is a multi-collateral-backed cryptocurrency, with value stable against US Dollar (aka. 1:1 aUSD to USD soft peg). It is completely decentralized, that it can be created using assets from blockchains connected to the Polkadot network including Ethereum and Bitcoin as collaterals, and can be used by any chains (or digital jurisdictions) within the Polkadot network and applications on those chains.

By this nature, it is essential that the Acala Network eventually become community-owned with an economic model that can sustain its development and participation in the Polkadot network, as well as ensure its stability and security. The following section will provide a high-level overview of the following topics:

  • aUSD and the Honzon stablecoin protocol
  • the economic model and initial parachain offering

2.1. aUSD and the Honzon stablecoin protocol

Every aUSD is backed in excess by a crypto asset, the mechanism of which is known as an over-collateralized debt position (or CDP). Together with a set of incentives, supply & demand balancing, and risk management mechanisms, as the core components of the Honzon stablecoin protocol on the Acala Network, the stability of the aUSD is ensured. The CDP mechanism design is inspired by the first decentralized stablecoin project MakerDAO, which has become the DeFi building block in the Ethereum ecosystem. Besides, the Honzon protocol enables many unique features - native multi-asset support, cross-chain stablecoin capability, automatic liquidation to increase responsiveness to risk, and pluggable oracle and auction house to improve modularity, just to name a few.

The Honzon protocol contains the following components

  • Multi Collateral Type
  • Collateral Adapter
  • Oracle and Prices
  • Auction and Auction Manager
  • CDP and CDP Engine
  • Emergency shutdown
  • Governance
  • Honzon as an interface to other components

Note: This section is still work in progress, we will update more information as we progress. Refer to the Github Wiki for more details.

2.2. Acala Network Economic Model

The Acala Network Token (ACA) features the following utilities, and the value of ACA token will accrue with the increased usage of the network and revenue from stability fees and liquidation penalties

  1. As Network Utility Token: to pay for network fees and stability fees
  2. As Governance Token: to vote for/against risk parameters and network change proposals
  3. As Economic Capital: in case of liquidation without sufficient collaterals

To enable cross-chain functionality, the Acala Network will connect to the Polkadot in one of the three ways:

  1. as parathread - pay-as-you-go connection to Polkadot
  2. as parachain - permanent connection for a given period
  3. as an independent chain with a bridge back to Polkadot

Becoming a parachain would be an ideal option to bootstrap the Acala Network, and maximize its benefits and reach to other chains and applications on the Polkadot network. To secure a parachain slot, the Acala Network will require supportive DOT holders to lock their DOTs to bid for a slot collectively - a process known as the Initial Parachain Offering (IPO). ACA tokens will be offered as a reward for those who participated in the IPO, as compensation for their opportunity cost of staking the DOTs.

Note: This section is still work in progress, we will update more information as we progress. Refer to the token economy working paper for more details.

3. Building


To connect on the "Mandala TC3" network, you will want the version ~0.4.2 code which is in this repo.

  • Mandala TC3 is in this Acala repo branch mandala-tc3.

  • Mandala TC2 is in this Acala repo branch mandala.

Install Rust:

curl -sSf | sh

Make sure you have submodule.recurse set to true to make life with submodule easier.

git config --global submodule.recurse true

Install required tools and install git hooks:

make init

Build all native code:

make build

4. Run

You can start a development chain with:

make run

5. Development

To type check:

make check

To purge old chain data:

make purge

To purge old chain data and run

make restart

Update ORML

make update

Note: All build command from Makefile are designed for local development purposes and hence have SKIP_WASM_BUILD enabled to speed up build time and use --execution native to only run use native execution mode.