Acala and Karura Join Wormhole to Take Polkadot, Kusama Multi-Chain

Acala, the Polkadot parachain supporting decentralized finance (DeFi) solutions, and Karura, its Kusama sister chain, have announced plans to come together to connect their respective ecosystems to Wormhole, the world’s largest multichain bridge.

Polkadot and Kusama’s Plight for the Future

According to an official statement released on Wednesday by the Polkadot team, the integration of the two DeFi infrastructure designs with the Wormhole bridging platform should commence in the second quarter of 2022.

This integration is expected to allow users of both platforms to send tokens from other Layer One (L1) networks such as Terra, Ethereum, Avalanche, Solana, and Binance Smart Chain (now known as BNB Chain).

The integration will also make it possible for users to convert tokens such as ETH, SOL, USDC, LUNA, and AVAX into assets native to Kasama and Polkadot. Additionally, the transferred tokens could also be used as collateral in the minting of kUSD and aUSD.

Recent Attack on Wormhole has not Dented its Popularity

Wormhole is a cross-chain protocol that uses smart contracts to enable users to send digital assets across multiple blockchains. Recently, the Solana Wormhole bridge came under a hacking attack, which led to the loss of 120k ETH worth an estimated $320 million. However, despite misgivings, the platform still remains the industry leader in multichain bridging infrastructures.

Through Wormhole, Acala and Karura users will enjoy unfettered asset integration and access to eight L1 networks with a combined liquidity of over $200 billion.

According to the press release, Karura will be the first to be connected to Wormhole. The platform, which serves as Acala’s equivalent on the Kusama network, will be used as a proving ground for the integration before it is ported to Polkadot.

Last year, Karura was in the news when it won the first-ever parachain slot auction in the Polkadot and Kusama networks. In the auction, the Kusama community contributed over half a million KSM to take the Karura network live on Kusama.

Benefits From the Acala and Karura Wormhole Integration

The Wormhole integration is expected to create many new opportunities for the Karura and Acala ecosystems to grow and increase the minting of aUSD. It will also allow the two platforms to directly communicate with each other and exchange values. In this way, they could merge their native tokens, aUSD and kUSD, to improve usability, liquidity, and capital efficiency on both networks.

The new cross-chain integration will also give developers the impetus to use decentralized applications (DApps) and other assorted assets on other blockchains to create new yield opportunities. Additionally, DApps built on Acala, Karura, or any other connected platform will be able to leverage Wormhole assets for their users.

A $250 million aUSD ecosystem fund has been established to support developers keen on building projects that can increase the yield and utility of aUSD. Teams building on Acala and integrating the aUSD stablecoin can also receive financial assistance from the Acala Grant.

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