Digital Finance Group, a global blockchain and cryptocurrency investment firm, this week announced it will allocate 500,000 DOT, Polkadot’s native cryptocurrency, to Acala, a decentralized finance platform built on the Polkadot blockchain network. Acala plans to compete for a parachain slot in Polkadot’s upcoming parachain auctions in order to build on Polkadot.
Parachains are application-specific data structures which can be confirmed by validators on the Relay Chain. They are often blockchains but do not need to be. As the number of parachains grow, only a few slots will become available every couple of months. Polkadot’s goal is to have 100 available parachain slots, which are necessary if a developer wants guaranteed block inclusion at every Relay Chain block.
These parachain slots are being sold via unpermissioned candle auction which has been modified to be blockchain-secure. This auction will have a known open phase which will be retroactively determined.
Digital Finance Group said its heavy investment in Polkadot aims to tackle the impediment posed by high gas fees. The company believes the multichain blockchain shows promise as an alternative to Ethereum.
Acala network’s layer-1 smart contract platform aims to power Polkadot’s DeFi hub. Unlike gas fees on Ethereum, which are decided by the market, the gas fees on Polkadot and its canary test network Kusama are driven by computer algorithms, with what the company said are constant fair fees depending on the size of the transaction with slight variations.
Digital Finance Group said the Coinbase-backed Acala Network is expected to win the first slot of Polkadot’s upcoming parachain auctions. Polkadot’s parachain auctions are scheduled to begin in early November.
Acala is planning a crowdloan in order to secure its place and build on Polkadot, Digital Finance Group added. As part of its crowdloan, Acala supporters can lock their DOT tokens for two years and in return, they are rewarded with Acala’s ACA tokens. Early contributors can utilize an unlocked token, representing their DOT contribution, with Acala’s recently launched Liquid Crowdloan Dot (IcDOT). When Acala launches on Polkadot after securing a slot, early supporters of the protocol will get a fair share of the Acala network ownership.
“Acala is the financial doorway for Polkadot and we are proud to support such a revolutionary project, serving the growing demand for Web 3.0’s financial hub,” said James Wo, founder and CEO of Digital Finance Group. “Karura has shown great success in the Kusama parachains, and we expect an even more promising future for Acala, one of the most well-developed blockchain projects.”
“Digital Finance Group’s support of the Acala Crowdloan is a continuation of its strong leadership in accelerating the decentralized economy,” added Acala’s Bette Chen. “We are happy to have the ongoing support of DFG as we approach launch and work to achieve our mission to improve financial accessibility, opportunity, and outcomes for people all over the world.”