What is Acala Token (ACA)?

Deep Dive

1. Purpose & Value Proposition

Acala aims to create a universal liquidity layer for web3 by merging decentralized and centralized financial tools. Its flagship product, the Universal Asset Hub, supports multichain liquid staking (e.g., converting DOT to liquid LDOT), an automated market maker (AMM) decentralized exchange, and EVM-compatible smart contracts. This allows users to stake, trade, and build applications while accessing both crypto and real-world assets (Acala).

2. Technology & Architecture

Built on Polkadot’s Substrate framework, Acala leverages cross-chain interoperability to serve as Polkadot’s DeFi gateway. Its Ethereum Virtual Machine (EVM) compatibility lets developers deploy Solidity-based dApps, while its hybrid architecture supports stablecoin swaps (aUSD), collateralized loans, and liquidity pools. The network uses nominated proof-of-stake (NPoS) for security, aligning with Polkadot’s shared security model.

3. Tokenomics & Governance

ACA has a fixed supply of 1.6 billion tokens, with 17% initially allocated to Polkadot parachain auction supporters. Token utilities include:
- Governance: Voting on protocol upgrades and treasury allocations.
- Staking: Earning rewards and securing the network.
- Fee payment: Covering micro gas fees for transactions and smart contracts.
A 1% monthly burn mechanism on unspent fees and 20% cumulative transaction fee burns aim to enhance scarcity over time.

Conclusion

Acala Token fundamentally acts as the economic and governance backbone of a Polkadot-based DeFi ecosystem designed for cross-chain asset flexibility. As hybrid finance gains traction, will Acala’s integration of traditional and crypto-native liquidity mechanisms position it as a critical web3 infrastructure layer?