The partnership means that Gauntlet, which works to build financial models of blockchain protocols and applications, will help Acala optimize solvency and capital efficiency for DeFi on Polkadot.
This is because Acala is the DeFi hub of Polkadot, a “multi-chain network” that aims to connect different specialized blockchains into a single unified network.
What’s the big DeFi deal?
DeFi (decentralized finance for those who don’t know) is blowing up big time. The biggest crypto exchange in the US, Coinbase, which went public this week, is listing more DeFi tokens than ever before. This shows that even early stage investors have a huge interest in the field.
But what exactly is it?
DeFi refers to decentralized finance-based cryptocurrency projects that (usually) run on Ethereum. They hope to revolutionize what banks normally do, like lend money or trade assets — but all online, using blockchains, and without a middleman, basically making things quicker and more efficient.
It’s a very new, experimental industry but people are making money and there is confidence that it could transform the way we make financial transactions in the future.
Where apps like Gauntlet come in
Security is an issue in the DeFi world, though. Gauntlet is working to help make things safer by ensuring DeFi apps are resilient to attacks by bad actors and that those who use the network are rewarded fairly.
Its platform has been trusted by major DeFi projects like Balancer, Compound, and Aave.
How Gauntlet will help Acala
Acala is a big deal, too as they aim to become the all-in-one DeFi hub of Polkadot, a rising protocol built on parachains. The platform allows users to stake, swap, borrow, lend, earn, and more—all for very low fees. Typically, executing DeFi transactions is a costly process, because the Ethereum network is so congested.
Acala is working to change this.
It is Ethereum compatible, meaning that most DeFi apps can use its platform. But it is powered by Polkadot—a promising project that has seemingly blown out of nowhere to become one of the biggest cryptocurrencies by market cap.
Gauntlet will work with Acala to make its system even more secure and cost efficient. This comes just before Acala launches Karura, a nearly identical DeFi hub soon to be deployed on Kusama – The crazy cousin of Polkadot where builders have the opportunity to experiment with new ideas.