'Acala Network Launches aUSD Polkadot's Native Multi-Collateral Stablecoin ' stablecoin acalanetworkpolkadot2021
. Acala’s Decentralized Monetary Reserve and aUSD are at the root of Acala’s DeFi ecosystem and will drive the Polkadot and Kusama ecosystems. The first two acceptable collateral assets for aUSD minting are DOT and LCDOT.
A method known as Collateralized Debt Positions is used to create the USD. The value of an aUSD token is fixed to the value of a US Dollar using the aUSD stablecoin protocol on Acala, which includes a set of incentives, supply and demand balancing, and risk management methods. The aUSD also has an on-chain liquidator, which eliminates centralized third-party risk and oracle quality of service, ensuring that oracle price feeds are included in every block.
Stablecoins are attracting authorities’ attention because ofo their widespread usage and significant market value. Some countries are even developing their own to preserve control over the money. The high volatility of cryptocurrencies makes them difficult to employ for day-to-day transactions. For instance, a shop may accept $5 in BTC for a coffee one day but discover that their BTC is worth 50% less the following day. This makes it challenging to plan and run a company around.
Stablecoins backed by crypto are comparable to stablecoins backed by currency. However, cryptocurrencies are used as collateral in dollars or another currency as reserves. Due to the significant volatility of the cryptocurrency market, crypto-backed stablecoins over-cover-collateralize their deposits as a hedge against price changes.
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