Acala Token Price (ACA) $0.0444 USD

What is Acala?

Acala token stands as a cross-chain DeFi hub and an active platform dedicated to stablecoins within the Polkadot ecosystem. Notably, it also functions as a conduit for Ethereum's DeFi applications, facilitating their integration into the Polkadot environment and tapping into the pooled cross-chain liquidity encompassing assets like BTC.

At its core, Acala coin introduces an array of distinctive DeFi products and foundational elements. One prominent offering involves a diversified stablecoin empowered by multiple collateral alternatives, and a dynamic interplay involving Bitcoin, DOT, and other select assets. Furthermore, Acala token introduces the concept of Liquid DOT (LDOT) staking derivatives, a mechanism enabling users to stake their holdings while simultaneously engaging in various other income-generating DeFi activities.

Acala Polkadot 

Polkadot is a fragmented, multi-chain ecosystem, created by Dr. Gavin Wood, he is also the co-founder and Ethereum's CTO, as well as the architect behind EVM and Solidity programming language, spearheaded the creation of Polkadot.

Functioning as a metaprotocol, Polkadot showcases remarkable scalability and an inherent capacity to facilitate cross-chain dynamics. Notably, the interconnected chains within the Polkadot ecosystem, akin to entities such as Acala, benefit from Polkadot's comprehensive PoS network security right from the very initiation of its launch.

The Acala EVM

The Ethereum Virtual Machine (EVM), designed by Acala's experts and launched in February 2021, stands as a unique virtual processor seamlessly integrating its capabilities with Ethereum and Polkadot technologies. This innovative mechanism is evolving to optimize and maximize the potential of Substrate.

Presently, decentralized applications (dApps) integrated into Acala's EVM have the capability to interact with data and assets across different blockchain platforms. This achievement owes itself to the advancing DeFi ecosystem within the realm of Acala EVM, paving the way for a more flexible and efficient exchange of resources.

Acala's Operational Mechanism

In addition to being a level 1 smart contract platform, Acala encompasses two fundamental protocols that underpin the entire Polkadot ecosystem:

Stablecoin Protocol - Honzon

The Honzon protocol relies on aUSD, a stablecoin developed within the Acala Network, and features a 1:1 peg to the US Dollar. Through this protocol, users gain the ability to create collateralized debt positions (CDPs), using digital assets such as Polkadot (DOT), Bitcoin (BTC), or Ethereum (ETH) as collateral. The core operational stages of the mechanism are as follows:

1. Collateral Deposit: Users deposit assets into Honzon, where these assets are then locked as collateral.
2. CDP Opening and USD Credit Acquisition: Users borrow a specific amount in US Dollars equivalent to the initial collateral value.
   
3. aUSD Redemption: Upon completing the operation, the user closes their CDP position and returns the borrowed aUSD, accompanied by a commission paid in ACA or aUSD.
   
4. Collateral Withdrawal: If needed, users can withdraw their deposited assets.
   

Additionally, Acala collaborates with Chainlink to develop a real-time oracle system for tracking asset values across different blockchains.

Acala's system reacts and balances automatically. If the value of the CDP collateral drops, a portion of the assets may be auctioned for US Dollars to level the mortgage rate. Conversely, when profits exceed a certain threshold, the surplus will be converted into ACA, and subsequently burned to stabilize the overall system's value.