Bison Trails will support Acala, the DeFi hub of Polkadot and an Ethereum‐compatible financial application platform, and Karura, Acala’s sister protocol on the Kusama network, when they launch this year.
As the two sister parachain networks stabilize, we expect there will be opportunities for Acala ecosystem partners to run collator infrastructure on the Bison Trails platform.
Although participating as a collator operator in the early stages of Karura and Acala does not yield participatory rewards, it:
Bison Trails’ unmatched expertise in running Substrate‐based infrastructure makes us uniquely positioned to provide enterprise‐grade node infrastructure for Acala and Karura collators.
Parity and Web3 Foundation have launched parachain functions on Kusama, Polkadot’s canary network, ahead of the upcoming launch of parachains on Polkadot later this year. Consequently, Bison Trails will first launch support for Karura on Kusama, followed by support for Acala on Polkadot. Karura collators are expected to be live in July 2021; we expect Acala support to be live closer to Q3‐Q4 2021.
Acala, a Polkadot parachain, is a decentralized finance network that aims to form the basis for Polkadot’s DeFi ecosystem. Acala will support financial applications and is coming to market with its own built‐in protocols, including:
Acala is Ethereum‐compatible by way of the Acala EVM, enabling Ethereum based dapps to access scalability by launching on Acala, and allowing gas fees to be paid in any token.
The Acala Foundation is responsible for overseeing and supervising the advancement of Acala and Karura. Karura operates identically within the Kusama ecosystem as Acala will in the Polkadot ecosystem. The Acala team notes that due to its "canary”" properties, Karura should be viewed as an experimental protocol focused on driving financial innovation.
Acala Dollar borrowing enables a credit facility modeled after Ethereum’s MakerDAO; the protocol produces a stablecoin (aUSD) as the unit of account for Collateralized Debt Positions (CDPs). This forms its body of over‐collateralized digital asset debt. aUSD is pegged to the USD and can be transferred to any chain in the Polkadot ecosystem.
Users can set up a CDP to mint aUSD using DOT as collateral and, in the future, may use any crypto asset that has been bridged into Polkadot, such as BTC or ETH, as collateral. The CDP holds the collateral asset along with the associated aUSD debt position, and the collateral asset cannot be withdrawn by the user until the aUSD debt is paid back. Closing a CDP also requires paying a stability fee in ACA (considered the interest rate of the aUSD loan).
aUSD uses off‐chain workers, called liquidators, to automate the process of monitoring and closing debt positions nearing their margin limit, increasing aUSD’s security and stability.
Oracle operators provide real‐time market prices for aUSD, collateral assets, and ACA; the Honzon Oracle operations will be permissioned initially, but the team expects this approval process to later be governed by ACA holders.
In Acala’s liquid staking protocol, users provide DOT liquidity to a pool and receive LDOT in return. These LDOT are liquid 'receipt' tokens that represent the underlying staked DOT assets. The staked DOTs are later delegated to a set of Polkadot validators selected via Acala’s governance process.
To redeem DOT with LDOT tokens, a depositor must wait an ~28 day unbonding period or pay a redeem service fee in ACA. Users can also pay a premium (in DOTs) to redeem their deposited DOTs from the protocol earlier than the 28 day unbonding period, even immediately.
ACA, the native token of Acala, serves three functions in the network:
The Acala team plans to launch with the Acala Treasury to grow the Acala parachain’s on‐chain collection of native assets (ACA) and foreign assets including DOT. The Acala Treasury’s goal is to enable self‐sustainability for Acala by accumulating enough DOT in order to secure future parachain slots without needing to rely on crowdloans to fund a winning bid. The Acala Treasury will be funded through ongoing protocol fees, as well as two community contribution events called "Build Acala."
Collator nodes are at the core of Acala’s functionality. Collators are parachain-specific nodes in the Polkadot ecosystem that prepare the blocks from parachains. These nodes are not responsible for validating and finalizing those blocks onto the main Polkadot Relay Chain. Instead, collators pass Acala’s blocks to a randomly selected subset of Polkadot’s Relay Chain validators, who then validate and finalize the blocks using Polkadot’s consensus method.
Because of this process, collator nodes do not have a direct impact on the security of the chain. The result of poor collator performance is a failure to get blocks from the Acala blockchain validated on the Polkadot Relay Chain in a timely fashion. This slows down the Acala parachain, as it gets out of sync with the Relay Chain’s state.
Acala plans to launch an authorized set of 15—20 collators provided by the Acala Foundation and third parties. Once the network is stable and the collator incentive model is finalized, the collator set will be open to public participation. As collators are non‐security critical a parachain only needs one collator acting as expected in order to be censorship‐resistant.
A large set of collators could potentially have adverse effects on the network such as by slowing it down; the collator incentive model being finalized by the Acala team will be designed accordingly. As collators are neither responsible for network security nor decentralization it is less demanding to run a collator node than a validator node, and Acala’s rewards are likely to reflect that dynamic.
Acala’s governance structure includes a primary council (the General Council) and referendum chamber aligned with feeder councils that govern different aspects of the protocol. This structure reflects Polkadot’s governance structure.
The early stages of Acala’s development are overseen by the Acala Foundation, with plans to implement self‐upgrading on‐chain governance in the future.
There are four governance councils in Acala:
In the authorized collator set phase of Karura and Acala there is no slashing, as Acala collators do not need to stake any assets to their nodes. Poor collator performance may lead to a collator being removed from the active set, but performance affects only liveness as opposed to presenting a financial or security risk.
Bison Trails’ expertise in running Substrate-based infrastructure is unmatched, making us uniquely positioned to provide unparalleled enterprise-grade node infrastructure for Acala collators.
Bison Trails is a blockchain infrastructure platform-as-a-service (PaaS) company based in New York City. We built a platform for anyone who wants to participate in 23 new chains effortlessly.
We also make it easy for anyone building Web 3.0 applications to connect to blockchain data from 33 protocols with Query & Transact (QT). Our goal is for the entire blockchain ecosystem to flourish by providing robust infrastructure for the pioneers of tomorrow.
In January, 2021, we announced Bison Trails joined Coinbase to accelerate our mission to provide easy-to-use blockchain infrastructure, now as a standalone product line. The Bison Trails platform will continue to support our customers. With Coinbase’s backing, we will enhance our infrastructure platform and make it even easier to participate in decentralized networks and build applications that connect to blockchain data.
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