The Acala team recently announced support for EVM-based smart contracts in their parachain. In short, this means that smart contracts that run on Ethereum can be run on their parachain. As they are targetting DeFi use case, I think that’s a great way to garner adoption. It’s also a bold strategy as I will outline below.
Some background on the Acala team
The team is actually composed to two teams who were already building for the Polkadot ecosystem. Those teams are PolkaWallet and Laminar. The latter focus on runtime engineering (“building chains”), while PolkaWallet is a mobile-first wallet for Polkadot (and Kusama).
These teams, both as separate entities and together as Acala, applied for grants in the Web3 Foundation grant program. Each application was successful too. I know this since I prepared their contracts. 😉
In my dealings with them they were always professional and honest, plus their enthusiasm and dedication to Polkadot is unsurpassed.
What is Acala?
In their own words:
“A decentralized stablecoin platform powering cross-blockchain open finance applications.” (Source)
The team are aiming to be the “decentralized financial hub of Polkadot” with “a suite of financial primitives: a multi-collateralized stablecoin backed by cross-chain assets like Bitcoin, a trustless staking derivative, and a decentralized exchange.” (Source)
Add in wallet support and you have a very compelling package that should entice both builders and users to the project. Merely building a blockchain doesn’t guarantee wallet support from day one, nor does it guarantee developers will want to build for it, but this is where Acala is making great headway to overcome those challenges.
For users, having access to a stablecoin is a big must and is something that I was personally wrong about. I didn’t think they would be so useful (+1 XP for me). Moreover, I suspect there could be a governance token coming too, one which is also the fuel for the contracts. I can see these features intertwining into some interesting token economics.
A bold strategy
A strong team announcing support for EVM-flavoured smart contracts is great for Polkadot, but I think it may ruffle a few feathers with other teams who are also planning to offer EVM compatibility. This is a bold move, but one that makes sense. Being able to attract DeFi developers to Polkadot is easier if there is a nice migration path from Ethereum to Polkadot.
It feels like a competitive move as EVM-compatible parachains will have an overlap in target audience. This is one of the interesting aspects of the blockchain space: you have open-source software and a general design principle of interconnectivity such that collaboration is highly encouraged, yet there is a limited number of developers. Acala is collaboratively in the sense that it should offer a stablecoin.
That said, there is some natural differentiation between the projects too. Should DeFi projects naturally adopt Acala, then I see this as an opportunity for non-DeFi projects to migrate to the other parachains (e.g. Plasm and Moonbeam). Ultimately, that may not be such a bad thing. Less projects on the same chain (“shard”) means less congestion.
The launching of the new parachains is something to watch closely over the next year or so; however, that is the subject of a future blog!
Acala Tokens
At the moment Acala are not selling any tokens to the public. If you see anything listed on Uniswap or elsewhere in the Ethereum ecosystem (e.g. as an ERC-20) then be very skeptical.
There has been some private sales to professional investors, but nothing public. There is no published date for a token sale, so currently there is no known way for small investors to get involved. Although I believe it could happen before launch. The team have a roadmap on their website which suggests a potential parachain launch of Q3 2020, but I do fear that timeline might slip.
Personally, I’d really like to buy some but as a non-professional investor of only modest means I will be waiting like everyone else in the community. While I believe Acala is a strong team I think everyone should do their own research and make up their own mind.
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