Polkadot’s network is rallying behind Acala’s aUSD stablecoin.
Nine Polkadot parachain teams launched a $250M Ecosystem Fund to support early-stage startups building Polkadot and Kusama-based dapps that support Acala Network’s aUSD stablecoin, according to a March 23 announcement from Acala.
aUSD is a crypto-backed and overcollateralized decentralized stablecoin designed to provide a fiat-pegged stable asset for use across Polkadot’s multi-chain ecosystem. The stablecoin was launched by Acala on Feb. 9 and can be minted against DOT, and LCDOT — the token representing DOT locked during Polkadot’s parachain auctions. Other assets are expected to be supported as collateral in future.
The aUSD Ecosystem Fund is supported by some of Polkadot’s top parachains including Moonbeam, Centrifuge, Efinity, HydraDX, OriginTrail, Parallel, Zeitgeist, Manta, and Acala. Leading VCs supporting the Polkadot ecosystem are also contributing to the fund, including Alameda Research, Digital Finance Group, and LongHash Ventures.
The Acala team states the nine projects have partnered “to grow aUSD as a building block for the ecosystem.” They describe the stablecoin as promoting cross-chain transactions and enabling robust “liquidity, pairs, yield, and utility” on both the Polkadot and Kusama networks.
The fund is seeking to back projects providing Substrate or Solidity-based “money markets, DEXes, derivatives, asset management, DAOs, payments, and other use cases.” It encourages “any Dapp or early-stage parachain building on Polkadot or Kusama that drives growth and utility of aUSD” to apply for grants of up to $50,000. Project can apply for larger grants, but will require more comprehensive evaluation.
Polkadot was created by Ethereum co-founder, Gavin Wood, after he left the Ethereum foundation in 2016. Alongside Cosmos, Polkadot is a front-running network pioneering the Layer 0 multi-chain architecture.
The Polkadot Relay Chain, also dubbed the network’s Layer 0, supports staking and DOT transfers. While the Relay Chain was launched in May 2020, other autonomous blockchains, dubbed parachains, will build out advanced functionality including smart contracts and dapps, and leverage the Relay Chain for robust shared security.
Parachain slots are leased to projects that compete to lock up large sums of crowdsourced DOT through auctions. The DOT is returned to crowdloan participants at the end of a lease’s duration, which lasts up to two years before the slot is again made available for auction.
In order to ensure that parachains are secure before they launch on polkadot, projects must first launch on Polkadot’s sister chain and test network, Kusama, which is built using the same Layer 0 architecture.
Acala won Polkadot’s first parachain auction in November with a bid of 32.5M DOT that was contributed by 81,000 crowdloan participants. Its parachain went live on Dec. 18 alongside the other winners of Polkadot’s first five parachain auctions.