what’s going on
To power Polkadot’s DeFi, DeFi network Acala has partnered with Polkadot’s innovation center, Astar Network. The “Astar x Acala DeFi Rising” initiative has just been released by two top parachains to give developers more options and incentives.
The growth of decentralized applications (dApps) on Astar is primarily due to the various adaptable financial instruments offered by Acala supporting the Polkadot network. The partnership will allow the developer to use Acala native assets such as his aUSD, LDOT and ACA with the added bonus and other benefits of collecting his ACA from the various teams that make up the Astar ecosystem. You can create your protocol in the Astar DeFi environment.
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What is Fudo Myoo?
The aUSD ecosystem is powered by the decentralized Acala financial network. Acala USD is the native stablecoin of the Polkadot ecosystem and is a decentralized, multi-collateral, crypto-backed stablecoin. Application developers can use his DeFi protocol built into Acala’s Ethereum-compatible blockchain. These protocols include trustless staking derivatives (liquid DOT — LDOT), decentralized exchanges, and EVM+, a hybrid EVM that provides an Ethereum-compatible development environment that is also fully compatible with Substrate. increase.
Polkadot Compostability, Parachains and Bridges – DeFi’s Next Frontier
All parachains joined to the Polkadot relay chain get economic security from the relay chain validator. This is important for DeFi composability.As teams must discover and bootstrap their own set of validators, there will be a high barrier to entry and the need for trust between communication chains in proof-of-stake systems. On the other hand, when using Polkadot, inter-chain communication does not depend on whether the receiving chain trusts the sending chain. Parachains share an equal level of trust, simplifying things for programmers and ensuring consumers a consistent experience across platforms.
Polkadot uses cross-chain message passing (XCMP) to implement asynchronous communication between parachains. In XCMP, sending a message either guarantees a response from the receiving chain, or sends a message in the hope that the sending chain will receive some response (such as the return value of a function called in the receiving chain). You will be able to
Using the bridge, Ethereum and Bitcoin-based DeFi will be able to interact with other nodes on the Polkadot network. Polkadot’s robust feature set makes it ideal for use in DeFi initiatives. Enabling the creation of decentralized blockchains opens the door to some compelling applications.
Instead of creating their own native parachains, some organizations are choosing to install their infrastructure on top of existing DeFi chains within the Polkadot ecosystem. For example, Ren deployed the RenVM bridge module on the Acala Network as part of its partnership with Acala.
Developers can choose to build on top of the parachain in one of two ways: by creating runtime modules and integrating them into the parachain, or by already building smart contracts (specifically Solidity or Ink ! based smart contracts). In the future, we expect that some groups will choose to develop using existing frameworks.
Liquid staking is a special type of DeFi. Staking token holders can gain instant liquidity without lockup periods by exchanging their tokens for exchange-tradable synthetic tokens. Token holders are clearly profiting, despite the increased risk of centralization. With at least six companies already developing solutions for it, Polkadot will become the most widely used blockchain ecosystem for liquid staking in the near future.
Polkadot’s DeFi initiative is not just a carbon copy of others. They are opening up a whole new field of research. Acala’s Decentralized Sovereign Wealth Fund (dSWF) is one such case. dSWF’s goal is to ensure the long-term financial viability of the Acala project by funding the Polkadot network’s maintenance costs and ongoing R&D. Similar to MakerDAO, Acala’s stablecoin platform requires payment of a Stability Fee upon closing a Collateralized Debt Position (CDP). Stability Fees collected after the CDP is terminated will be deposited in the Central Account. After that, when the profit of the system exceeds a certain level, the additional his ACA tokens will not be burned, but will be used to buy DOT on the open market and will be added to dSWF’s DOT reserve. Innovation in the Polkadot ecosystem is moving forward at an alarming rate with the implementation of cross-chain message passing and compatibility between protocols and blockchains.
Understanding the Fudo Myoo Ecosystem and Polkadot
The de facto stablecoin of the Polkadot and Kusama ecosystems, aUSD is issued and traded on the Acala DeFi network that powers Polkadot’s financial apps. Staking DOT tokens on the relay chain ensures security and allows a user to use her LDOT to maintain liquidity. LDOT is a token backed by staked DOT, one of Acala’s newly released DeFi solutions.
The DeFi Rising initiative, which uses Astar’s Cross-Consensus Messaging Format (XCM) to perform trustless and decentralized cross-chain transfers, is the first step towards a healthy DeFi ecosystem.
For Astar to become the de facto standard for multi-chain smart contracts, developers will need access to a large supply of high-quality assets like aUSD and LDOT. Astar programmers can use Acala’s solid foundation to build new decentralized applications. In exchange, early use cases for broad adoption of aUSD across a multi-chain future will be developed by the Astar ecosystem.
Acala’s $250 million aUSD ecosystem fund and Astar’s SpaceLabs initiative will be available for projects that increase the value of aUSD on the Astar Network. Startups developing robust stablecoin use cases on either the Polkadot or Kusama parachains are encouraged to apply for the USD 250 million ecosystem fund. The aUSD community is looking for use cases including Money Markets, DEXs, Derivatives, Wealth Management, DAOs, Payments, and any other use cases powered by Solidity or Substrate that may increase the yield or utility of a currency .
Final Thoughts on Astar and Acala DeFi Rising Programs
The Astar and Acala collaboration is important to the Polkadot ecosystem as it connects developers and fosters innovation in DeFi. In my opinion, for the Polkadot ecosystem to compete with Ethereum, such a program is essential for attracting software developers to build the next generation of applications.
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Image credits: GuerrillaBuzz Blockchain PR Agency, Mike Enerio, Nik Shuliahin.
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