Anchor Protocol, Acala team up to bolster aUSD and UST use

Anchor Protocol, a decentralized finance (DeFi) protocol built on the Terra blockchain, has teamed up with Polkadot’s Acala network in a collaboration aimed at promoting decentralised stablecoin use in the Terra and Polkadot ecosystems.

Uniting Terra and Polkadot ecosystems

Acala and its Kusama-based parachain Karura will use the collaboration to support the Terra USD (UST) stablecoin. To achieve this, Acala will use its yield-bearing liquid staking derivatives to help Anchor expand its UST collateral options.

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In this, Anchor is eyeing new inroads into the market through Acala’s Liquid DOT (LDOT) and Liquid KSM (LKSM) products.  As a result of this partnership, Anchor is set to integrate the LDOT and LKSM tokens as collateral assets.

According to a blog announcement published Wednesday, the partners also seek to bring UST users into the Polkadot ecosystem.

Anchor Protocol tweeted on Wednesday.

The Anchor and Acala collaboration represents a significant milestone in uniting the Terra and Polkadot ecosystems in order to bring decentralized money to the masses. Users across both chains will now have access to more liquidity and yield opportunities than ever before,” Liquidity pools for aUSD and UST”

The two teams are thus also looking at launching deep liquidity pools to support both aUSD and UST on the Acala network. These will happen via the Tapio stableswap protocol. aUSD is the native decentralised stablecoin in the Polkadot ecosystem.

Acala’s integration with the cross-chain bridge Wormhole is also among the key roadmap developments to come from the collaboration. Once this happens, Acala users will be able to bridge assets across the Terra and Polkadot networks.

Anchor and Acala expansion efforts

Anchor’s move to team up with Acala comes at a time the protocol has looked to expand beyond its native Terra blockchain. In March, the protocol launched on Avalanche and could eye more integrations as its popularity among DeFi users continues to grow.

Acala has also sought to attract more developers to build around aUSD. The protocol recently launched a $250 million aUSD Ecosystem Fund, likely to attract teams within the Polkadot and Kusama ecosystems.