Acala and Karura DeFi networks connect to Wormhole ecosystem

abdelaziz Fathi

Acala, the all-in-one DeFi hub of Polkadot and Karura, the DeFi hub of Kusama being built by the Acala team, are integrating with the Wormhole ecosystem.

This alliance will enable users of both Acala and Karura DeFi networks to benefit from cross-chain interoperability, asset integrations and access to over $200 billion of liquidity from leading layer-1 networks.

Wormhole is a bridge that connects multiple blockchains including Ethereum, Solana, Terra, BNB Chain, and Polygon. The interoperability protocol facilitates any type of data to be passed between different networks. For instance, it enables users to bridge wrapped tokens like USDC on Solana, as well as NFTs, with the list continually growing.

As such, the latest integration will connect the broader Polkadot and Kusama ecosystem to eight layer-1 chains. On top of that, Acala and Karura will benefit from Wormhole’s consensus abstraction, speed, and upgradeability mechanics.

As both networks will be able to communicate and exchange value, the collaboration helps Acala to finalize the merge of the two stablecoins, aUSD and kUSD. Thanks to the Wormhole integration, foreign tokens such as USDC, ETH, SOL, AVAX, or LUNSA can be brought to the Acala and Kusama ecosystems.

Many other benefits

Wormhole, which has locked in over $3.6 billion in total value (TVL) across all chains, also offers a software development kit (SDK) for developers to build on their bridge and make cross-chain assets with ease.

“Users will be able to trade the assets or have Acala potentially approve them as collateral for minting aUSD. The support promotes easy onboarding of users from other networks and allows users to extract liquidity from their collateral assets. Wormhole, combined with Polkadot-native collaterals like Interlay’s trustless BTC, will help aUSD have the most diverse and liquid collateral base of any stablecoin in the market,” the statement further explains.

The recent connection comes at a time when the demand for cross-chain bridges for digital asset swaps and liquidity is at an all-time high. The adoption is increasing as DeFi and NFT markets continue to generate revenue in the space. To meet these demands, Wormhole’s generic architecture facilitates the passing of any message across the chain allowing for governance, liquid staking tokens, and access to oracle data.

Acala’s Wormhole connection also enables DApps to leverage tokens from other chains, such as in a money market or DEX. The bridge mechanism creates supply and demand scenarios beneficial to Acala users, as well as foreign chains. Additionally, protocols using the Wormhole network can leverage access to a large market to support their different use cases.

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