Polkadot Launches First Cross-Chain Link Between Acala & Moonbeam

Moonbeam has announced a cross-chain link with Acala using HRMP bidirectional channels that allow token transfers and native communications between the chains without any bridges. The connection uses XCM on the Polkadot platform as XCM was recently released. However, many more will undoubtedly be launched soon in a similar way that most XCM-based integrations have been performed on Kusama. 

The utility tokens of Acala, GLMR, and ACA and its decentralized stablecoin, aUSD, will be directly used and freely moved in DeFi ecosystems across both parachains. The GLMR utility token will be accessible on Acala after the runtime upgrades on Moonbeam later in May. 

XCM is a new mechanism that allows interoperability on Kusama and Polkadot ecosystems. The technology will allow rich interaction and messaging between the parachains on blockchain networks. During the initial phase of the launch, most of the interactions will center around the token movements. In the future, XCM and other technologies on cross-chains will support a range of messages that will allow multi-chain dApp deployments, leveraging specialization on every chain, such as storage, privacy, and identity management. 

GLMR will be used on DeFi apps on Acala in the future, and it will be a supported collateral kind in the future for minting more aUSD stablecoins. Simultaneously, aUSD and ACA coin holders can deposit these assets on Moonbeam and use them through dApp dashboards. From here, the coins can be transferred and used on multiple apps in the Acala DeFi ecosystem as xcaUSD and xcACA. The token assets are called XC-20s, and they are based on the ERC-20 standard but with improved cross-chain abilities. 

Acala, a decentralized DeFi network, powers the stablecoin ecosystem using aUSD. The Acala blockchain network provides access to derivatives and assets based on DOT, aUSD, ecosystem assets on Polkadot, and other cross-chain crypto assets from BTC, ETH, and many more. The array of financial apps provides various options like multi-collateralized cross-chain assets backed by stable coins (aUSD), an AMM DEX, and liquid DOT staking that allow users to get rewards by supporting Dotsama. 


The utility token, ACA, powers the Acala network via transaction fees, governance, algorithmic risk adjustment, node incentives, and pallet deployment. 

Through this integration with parachains such as Acala, Moonbeam will set an example for interoperability and continue expanding the platform’s access to enormous ecosystems of Substrate-native assets and tokens.  

The XC-20 introduction on Polkadot will allow native assets from various parachains, such as xcDOT, to be employed on dApps based on Moonbeam, similarly to ERC-20 tokens. 

XC-20 tokens will conform to the ERC-20 token standard, developed as the technical standard for smart contracts on ETH and ETH-compatible blockchain networks. Providing support for the ERC-20 tokens is an excellent way of making it easier for Moonbeam developers to re-use existing projects on Kusama. Generally, this makes the creation of tokens much simpler. The XC-20 tokens are compatible with ERC-20, but they have the cross-chain capability by using XCM functions from Polkadot.