One of Polkadot’s main parachains, Acala, has unveiled a key update that will bridge both projects with Ethereum.
Ethereum-Compatible DeFi on Polkadot
Acala already exists as a DeFi hub and stablecoin issuance platform on the Polkadot blockhain.
Now, the project is creating its own Ethereum Virtual Machine, dubbed the Acala EVM. The new update will give developers full-stack composability between Acala itself, Polkadot’s Substrate programming language, Ethereum’s Solidity programming language, and WebAssembly or Wasm.
This will allow the Acala EVM to support multiple crypto tokens such as DOT and ACA, as well as Ethereum-based ERC-20 tokens.
Additionally, the Acala EVM will enable on-chain scheduling and fundamental DeFi activities like stablecoin lending and DEX activity. An oracle contract will provide price feeds.
Acala also aims to offer “micro gas fees.” This means that it will likely provide a faster and less expensive alternative to Ethereum, which currently suffers from high transaction fees.
The Race for Web3
With the help of Acala, Polkadot developers are racing against Ethereum to become the leading Web3 blockchain. However, catching up with Ethereum will not be an easy task.
Ethereum has over 1 million users, and virtually every major DeFi protocol runs on top of the blockchain. Ethereum processes over 1 million transactions daily, while Polkascan indicates that Polkadot processes 10,000-20,000 transactions per day.
Though Polkadot is capable of settling transactions quickly, attracting developers may be a different issue given Ethereum’s popularity. But, given that Ethereum is under strain from high transaction volumes, adopting Acala could be an attractive option for developers.
Disclosure: At the time of writing, the author of this feature owned ETH, among a number of other cryptocurrencies.