Proposal Summary

Parallel team proposes to add aUSD as a borrowable asset and ACA as collateral to Parallel Money Market. This will significantly bring liquidity to the Money Market, improve the connection of the Dotsama ecosystem, and further drive the DOT related economic growth and adoption.

Background

Acala is a decentralized finance network powering the aUSD ecosystem. The core product, Acala USD, is a decentralized, multi-collateral, crypto-backed stablecoin serving as the native stablecoin of the Polkadot ecosystem. Acala’s Ethereum-compatible blockchain has built-in DeFi protocols for application developers to leverage, including a trustless staking derivative (liquid DOT — LDOT), a decentralized exchange, and the EVM+, a hybrid EVM offering fully Ethereum-compatible development environment plus full compatibility with Substrate.

Expected Benefit to Parallel Finance

Currently, users are only allowed to borrow DOT, sDOT and GLMR against their collateral in the Money Market. The addition of aUSD, the top 1 stablecoin used in for Polkadot and Kusama will significantly improve the overall capital efficiency of the ecosystem, and help alleviate the liquidity pressure on DOT.

Having ACA as collateral will help attract users from the Acala and Karura ecosystem into Parallel Finance and therefore give them more options to allocate their ACA token. This will be a win-win for both the Acala community and the Parallel Finance in terms of long-term growth and further improve the DeFi compatibility within the Polkadot ecosystem.


Rational

Supporting aUSD as a borrowable asset on Parallel Money Market will allow aUSD to bring in extra liquidity to Parallel Finance, and further solidify the position of aUSD as the top stablecoin within the Dotsama ecosystem.
By serving as the native stablecoin for the Dotsama ecosystem, the Acala and Parallel ecosystems can join forces to build a multi-chain DeFi economy around a single stablecoin. This allows the two networks to mutually benefit from an ever-increasing issuance and utility that comes from a common stablecoin. We believe the unified liquidity and coordinated adoption efforts that result from a focus on aUSD will benefit both Acala (ACA) and Parallel (Para) network owners given the economic benefit.


Problem Statement:
- The current lack of borrowing options and limited collateral options in the Parallel Money Market restricts liquidity and hinders the growth of the Polkadot ecosystem.

Significance:
- Adding aUSD as a borrowable asset and ACA as collateral will significantly improve capital efficiency, alleviate liquidity pressure on DOT, and attract users from the Acala and Karura ecosystems to Parallel Finance.

Proposed Solution:
- Add aUSD as a borrowable asset and ACA as collateral to the Parallel Money Market.

Expected Outcomes:
- Increased liquidity in the Money Market, improved connection of the Dotsama ecosystem, and further economic growth and adoption of DOT.

#198 Proposal | Support aUSD as a borrowable asset and ACA as a collateral on Parallel Money Market