As ICON builds out blockchain interoperability connections through its groundbreaking Blockchain Transmission Protocol (BTP) technology, it is useful for Iconists to become familiar with compatible blockchains. This article is the sixth part of a ‘BTP series’ in which we take an introductory look at all the blockchain networks that will be joining the ICON community. Be sure to also check out the other articles in the series:
Although development of BTP has not yet been finalized, a “lite” version of the technology called ICON Bridge will soon be launched, finally opening the doors to interoperability between ICON and other BTP-compatible blockchains. In addition to the blockchain projects linked to above, ICON will also be bridging to Acala Network, a Polkadot parachain.
Let’s take a look at Acala and get to know what it’s all about.
What is Acala and Why is it Great for BTP Developers?
Acala is a bit different from most other blockchains. It’s a layer-1 parachain built on the “layer-0” Polkadot blockchain using the Substrate framework. In plain English, this means it lets developers build smart contract-capable Dapps on it, just like ICON, except Acala is much more specialized in the way it is designed. Acala’s unique value proposition is that it’s built from the ground up for decentralized finance (DeFi) with micro-gas fees, and it has a number of features that make it a great choice for DeFi.
With ICON’s announcement of a 200 million ICX fund (worth over US$157 million at today’s exchange rate) for the development of BTP interoperability projects, together with Acala’s 250 million aUSD fund (worth around US$250 million), we can expect to see a number of developers building DeFi projects that bridge to Acala to take advantage of the parachain’s unique advantages. A few of the main benefits of developing for Acala are outlined below.
One of the most interesting features of Acala is that it is not just another “general purpose blockchain.” With most other blockchains, Dapp developers have to build their projects to work around the individual quirks and constraints of the blockchain they choose. Not necessarily so with Acala — the Acala team continuously adapts and evolves the parachain to meet the specific needs of the applications being built for it. This is made possible through Polkadot’s Substrate framework, which allows Acala to easily add custom functionalities on top of the blockchain via plug-and-play modules. The end result is that Acala is a very responsive and scalable blockchain for DeFi — making it a great choice for BTP projects.
Another thing that Substrate makes possible is Acala’s built-in DEX (decentralized exchange). That’s right: AcalaSwap isn’t just another Dapp, but is instead a core functionality built directly into the parachain. AcalaSwap is an AMM (automated money maker)-based DEX similar to Ethereum’s UniSwap, but with a few amazing features that you won’t find anywhere else: It offers liquidity and great backend functionality for other Polkadot Dapps, protection from Ethereum’s “MEV” invisible taxes, and the ability to pay transaction fees in any supported currency on the exchange without wrapping tokens. ICON projects could directly benefit from building interoperability for their tokens with a great DEX such as this.
Another of Acala’s undisputed strengths is its ability to to upgrade without forking the blockchain. BTP developers can rest assured that their hard work won’t be wasted or need to be redone when Acala improves their core systems — it should just keep on working, only getting better and better with age.
Acala’s primary token usable across its ecosystem is the recently launched $aUSD stablecoin. It’s a crypto-collateralized stablecoin like Maker’s Dai, except it’s actually guaranteed to be over-collateralized at all times, making aUSD a relatively safe store of value. This could be good news for BTP projects that have to buy in to Acala’s currency (if that ever becomes necessary). Acala also has their own governance token called $ACA.
Acala only recently went live on Polkadot in January 2022, so there aren’t too many projects launched for it yet. In addition to the aforementioned AcalaSwap, it was just announced that Terra’s Anchor Protocol will be expanding to Acala, which will be a big boost for the parachain. It’s also important to note that Acala was actually the first project to officially win a Polkadot parachain slot auction last year with over US$1.3 billion worth of DOT committed, so it can be assumed that this is a very serious project with big ambitions.
Who is behind Acala?
The organization behind Acala is called the Acala Network, and is based in Singapore. Their core team is made up of four co-founders — Bryan Chen, Bette Chen, Ruitao Su and 0xThreeBody, — along with Chief Growth Officer Dan Reecer.
For more information about Acala, please visit their website or blog. You can also follow them on Twitter.
