### What is Acala?

Acala is a scalable Layer 1 DeFi network that serves as the liquidity hub of the Polkadot ecosystem. It functions as an interoperability parachain compatible with Ethereum, allowing decentralized finance (DeFi) applications to use Polkadot for exchanging assets or smart contracts with Ethereum via integrated Acala protocols.

### How does Acala work?

Acala operates on Polkadot's Substrate framework, which provides it with a robust security architecture and interoperability features. As a parachain within Polkadot, Acala uses the Proof of Stake (PoS) consensus mechanism and is maintained by collators who ensure network stability. It employs Cross-Chain Message Passing (XCM) for seamless transactions across blockchains and supports Ethereum Virtual Machine (EVM) compatibility, facilitating the creation of Solidity-based applications and seamless cross-chain interactions.

### What are the potential use cases for Acala?

Acala's potential use cases include:

- **Cross-Chain Stablecoin (aUSD):** Facilitating stable and secure transactions using its multi-collateral backed stablecoin.
- **Liquid Staking (L-DOT):** Enabling the use of staked tokens as collateral, thus increasing capital efficiency.
- **Decentralized Exchange (DEX):** Providing cross-chain asset swaps and enhancing liquidity.
- **Institutional Finance:** Collaborating with traditional finance sectors through partnerships to integrate DeFi and CeFi solutions.

### What is the history of Acala?

Acala was founded in 2019 by Ruitao Su, Fuyao Jiang, Bryan Chen, and Bette Chen. The project has achieved significant milestones, including a $7 million funding round in 2020, led by Pantera Capital. The Acala mainnet was launched with a fixed supply of ACA tokens, and the platform introduced EVM compatibility to enhance its DeFi services and cross-chain interactions. Acala continues to grow and collaborate with partners to expand its ecosystem within the Polkadot network.

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