By
Godfrey Benjamin
April 18th, 2024
The Acala Network will allocate these funds to support teams building on the Polkadot parachains and having a strong use case for aUSD.
On Wednesday, March 23, decentralized finance (DeFi) hub and stablecoin platform Acala Network announced the launch of a $250 million aUSD Ecosystem Fund. The goal is to support early-age startups building parachains on the Polkadot blockchain and having a strong aUSD use case. The announcement comes in partnership with decentralized lending and staking protocol Parallel Finance.
Acala USD or aUSD is the native stablecoin of the Acala Network. To launch this aUSD Fund, Acala partnered with eight Polkadot parachain teams along with other supporting venture funds. The participants of this fund are looking for building Substrate-powered or Solidity applications to drive high yield and utility for Acala’s aUSD stablecoin.
This includes decentralized exchanges (DEXs), asset management, derivatives, money markets, DAOs, payments, and other use cases. The funds will also help in expanding the two ecosystems – Polkadot and Acala – for powering cross-blockchain liquidity and applications. Speaking of the development, Yubo Ruan, Founder of Parallel Finance said:
“aUSD is a key infrastructure for Polkadot’s multi-chain ecosystem that will empower our users. We are proud to be joining the aUSD Ecosystem Fund as a parachain partner to grow aUSD utility within our ecosystem”.
Plans of Acala after Its Ecosystem Fund Launch
After the acceptance of the aUSD Ecosystem Fund, the Acala team along with its partners will secure capital from other industry-leading funds. The announcement further notes that enabling aUSD will allow users to transfer funds across parachains on Polkadot and Kusama without needing any bridge. The press release notes:
The native decentralized stablecoin of Polkadot, aUSD is a multi-collateral, crypto-backed stablecoin that allows users to release liquidity from reserve assets to earn yield while maintaining ownership.
Also, the existing reserve assets on Polkadot are DOT, KSM, ACA and KAR. The Acala Network was the first to win a parachain auction on Polkadot last year in November 2021. Since then it has emerged as a successful DeFi protocol and a liquidity hub of Polkadot.
Acala launched its aUSD multi-collateral stablecoin earlier this year in February. It seeks to become the stablecoin powering the Polkadot and Kusama ecosystems. The aUSD stablecoin protocol uses a multi-collateral backing system thereby creating a token soft-pegged to the USD. It will mint a stable currency from a basket of reserve assets so that users can transact, trader and offer services without worrying about the volatility of aUSD.