What Is Acala Dollar (AUSD)? Complete Guide & Review About Acala Dollar

What Is Acala Dollar (AUSD)?

The Acala Dollar USD (aUSD) stablecoin protocol enables a decentralized, cross-chain stable currency that serves as the native stable coin of the Polkadot and Kusama ecosystem. aUSD is minted from a variety of reserve assets. This allows holders of the reserve assets to earn, spend, trade, and access other services without price volatility while retaining ownership of their reserve assets.

Acala USD is pegged to the US Dollar. aUSD can be trustlessly integrated by any blockchain connected to Polkadot or Kusama, as well as applications deployed on those chains. aUSD can also be integrated cross-chain on any other connected blockchain network.

Anyone can mint aUSD using accepted reserve assets, and each aUSD is backed by a surplus value of reserve assets (collateral assets). The reserve assets are also cross-chain by nature, which can include Polkadot native assets (DOT and DOT derivatives), KSM and KSM derivatives like LKSM, Acala Dollar native token ACA, and Karura’s native token KAR. In the future, the protocol can also accept parachain assets and cross-chain assets like Bitcoin (BTC) and Ether (ETH) as collateral assets if they meet the risk requirements and are accepted via governance.

Acala Dollar Storage Key Points

A Decentralized, multi-collateral, crypto-backed stablecoin

Stable

Pegged to one dollar. 1 aUSD = 1 USD.

Censorship-Resistant

Backed only by decentralized assets in Collateralized Debt Positions (CDP).

Multi-Collateralized

Backed by cross-chain & native parachain assets: DOT, KSM, ACA, KAR, BTC, and ETH.

Secure & Efficient

Liquidations powered on-chain with guaranteed oracle price feeds.

Natively Cross-Chain

aUSD can be transferred cross-chain to any parachain on Polkadot or Kusama.

Built by developers, for developers.

Funded by the Web3 Foundation, the aUSD stablecoin is the core product of Acala Dollar, the first parachain to earn a slot on Polkadot. Developed by the top Substrate contributors, aUSD is the native decentralized stablecoin of the Polkadot and Kusama ecosystem.

Assets

Acala USD (aUSD):

the Acala stablecoin that is pegged to the US Dollar. Minting aUSD is trustless and done by over-collateralizing with a Collateralized Debt Position (CDP). aUSD is censorship resistant, decentralized, and cross-chain in nature and serves as the native stablecoin of Polkadot and Kusama.

Reserve Assets:

DOT, LDOT (Liquid Staking DOT powered by Homa Protocol) and ACA are default reserve assets. New cross-chain assets can be included as reserve assets upon assessment by Acala Dollar on-chain Financial Committee and Risk Assessor like Gauntlet.

Acala Token (ACA):

the native token of Acala. ACA is a reserve asset that can be used to mint aUSD. It’s also the governance token used to regulate stablecoin price by adjusting risk parameters such as interest rates. ACA is also the transaction fee token of the network and has a fixed supply of 1 billion ACA.

Why Mint aUSD

The aUSD stablecoin is decentralized, non-custodial and permissionless. aUSD allows users to hedge against price volatility, increase exposure of assets from multiple blockchains, and use the minted/borrowed aUSD trustlessly on multiple blockchains.

Yield & Liquidity for Reserve Assets:

while maintaining ownership of assets e.g. DOT, users can collateralize to borrow aUSD to hedge volatility, pay for goods and services, or access services without price exposure. For examples, users could provide liquidity to a stable coin pool, use a stable coin savings product, or purchase an NFT.

Increased Exposure of Your Assets

traders may leverage long (increase exposure) on a given reserve asset e.g. DOT by depositing the asset to the Acala Dollar vault as collateral, minting aUSD, using the aUSD to purchase more reserve assets and deploy them into the vault, and repeat the process to increase exposure. Note: please proceed with caution as this also magnifies the risk of loss as well as gains.

Why Teams are integrating aUSD

Yield & Liquidity for Reserve Assets

Release liquidity from reserve assets to earn yield while maintaining ownership. DOT, KSM, ACA, and KAR are reserve assets, while parachain tokens, BTC, and ETH are on the way.

Polkadot’s Default Routing Asset

As the native decentralized stablecoin of the Polkadot and Kusama ecosystem, aUSD will provide a universal trading pair, routing to all assets in the ecosystem.

Trustless Transferability

Leverage aUSD in your DApp on any parachain without wrapping or bridging to ensure your DApp is secure and trustless.

Substrate & ERC20 Compatible

Acala Dollar aUSD can be integrated seamlessly into Substrate-native DApps as well as EVM-compatible DApps on any parachain.