By Dan Reecer, Feb 9,2022 @ Medium.com
TLDR: Acala has launched Acala USD, a decentralized, multi-collateral stablecoin. aUSD is the core of Acala’s DeFi ecosystem, and will serve as the stablecoin powering the Polkadot and Kusama ecosystem.
How aUSD Works
Acala’s stablecoin protocol uses a multi-collateral backing mechanism to create a stablecoin soft-pegged to the US Dollar. The Acala stablecoin protocol mints a stable currency from a basket of reserve assets. This enables people to transact, trade, and facilitate services using aUSD without price volatility and, if desired, while retaining ownership of their reserve assets like ACA, DOT, DOT derivatives, parachain assets, and assets bridged from other consensus networks like BTC, or ETH.
aUSD is minted using a system called Collateralized Debt Positions (CDPs). Together with a set of incentives, supply and demand balancing, and risk management mechanisms within the aUSD stablecoin protocol on Acala, the value of an aUSD token is pegged to the value of a US Dollar.
Head over here to learn more about how aUSD works.
Polkadot’s Native Stablecoin
Today’s launch marks the beginning of the initial bootstrapping phases of aUSD. First, aUSD’s liquidity will be built up on the Acala blockchain, then the stablecoin can begin to be integrated into all live parachains and DApps in the Polkadot and Kusama ecosystem. The goal of aUSD is to be the most useful form of decentralized stable currency in the Polkadot ecosystem, serving as the default pair, routing asset, and means of exchange among all users and developers. Achieving this goal will lead to a flourishing ecosystem among the Polkadot parachains, as well as strong value creation for the Acala chain as collateral is locked in order to mint aUSD.
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