# Exploring the Acala ecosystem using Polkawallet By [Prcrypto](https://paragraph.com/@prcrypto) · 2022-12-06 --- \*\*The [acala network](https://acala.network/) \*\*is building an ecosystem of decentralized finance within Polkadot,so Polkadot is about to launch right now and to actually help with that on the decentralized finance side,acala is coming in. It’s a collaboration between two projects right now,the Polkawallet team and the Laminar team.The Polkawallet is a mobile wallet for Polkadot,it supports cross chain assets,staking and other functionalities,Laminar supports margin trading as well as synthetix trading. **So what is acala trying to do.** One of them is the ability to create a stablecoin **(acala dollar)**  by locking up your collateral. **Liquidified staking** where you stake and you are able to have a derivative of your staking. And then the last thing has to do with the **swapping of coins** using the acala dex. In this piece,we will go through how to create a CDP in acala,how to earn rewards in acala with staking,how to earn rewards with the deposit and earn feature and the acala dex. \*\*To get started,we will first download and install the [Polkawallet](https://polkawallet.io/) \*\*on our mobile devices. ![How to install and use Polkawallet](https://storage.googleapis.com/papyrus_images/80d412bef9a56a777ba0290171e541875ca151d6595000743e5df05f119107fc.png) How to install and use Polkawallet **Minting of stablecoins** The acala network is seeing that there is a problem with cryptocurrencies,let take for example you invested $1 in crypto yesterday and after three months that $1 is now worth $10,you will be very happy as an investor.So what about the merchant who accepted $1 in crypto for a purchase yesterday and after 3 months,if it’s $10 he is happy and what about if the crypto he accepted are now worth $0.10. So you can say crypto is a good tool for investment speculation but not good for business payments and that is where the need for stablecoins comes in. There are a lot of stablecoins out there,we have the likes of those pegged to fiat currency like USDT,USDC,we have others that are pegged to assets like gold,there are those controlled by algorithms or code(DAI) and others that are pegged to other stablecoins like xdai. So what we are talking here is the Acala dollar,it functions similar to DAI from makerdao,in MakerDAO when you lock up an asset like ETH,USDC,WBTC you will be able to mint DAI that you should be able to take loans with or earn interest on or use for other purposes in different dapps within Ethereum. Same applies with the acala dollar,when you lock up any collateral like **DOT,ACA,RENBTC,XBTC** ,you can now take a position by minting either 100% worth of your collateral or less. Note it’s not advisable to take 100% worth your current collateral as you may be liquidated when the collateral worth falls below your loan and that will force you to lose your collateral. ![how to create a CDP](https://storage.googleapis.com/papyrus_images/07da19b173588488f1b3f3191198a89f0e8887dc78fbe169799ad24a53dc611d.png) how to create a CDP **The issue of staking** One of the greatest challenge the blockchain industry is currently facing is that of security,the other the Ethereum classic network was hacked and someone was able to cart away with over $5 million,a case the ETC labs team have hired a law firm and data analytics firm to pursue. **_Staking provides security as well as validation_** We have the proof of work,which is a system where people can actually use computational power to validate blocks but we see that it’s very computationally expensive,it’s almost entirely for the rich,the barriers to entry are very high,it requires huge capital for setting up and maintenance,it’s environmentally disastrous,you need to have access to very cheap electricity. So a lot of criticisms comes around the area of scalability and environmental concern. Proof of Stake does not require heavy computations,it’s easier to set up and maintain,many blockchain networks are embracing staking as a consensus mechanism but the staking industry is been threatened by the lending industry. **_Lending offers better returns and is more easier to initiate than staking,there are almost no minimum required unlike staking._** Lending is very easy,like with Acala,you simply navigate to the button that says lending and you lend your tokens,but when it comes to staking most of the times,you have to set up hardware,your computer has to have almost 99% uptime if not your stake may be slashed or you may miss out of some rewards ,sometimes you may need to have some technical know how to engage in it. The rewards from staking most times are not big compared to lending and for the users nobody cares if there is a network to secure,the question most people ask is : **WHERE CAN I GET THE BEST ROI ON MY MONEY?** **_If the 32 ETH required to be a staker on the Ethereum offers less rewards compared to lending,it’s only true that many will go the lending route._** The Homa protocol within acala will help people have a derivative of their stake,so what this means is that,if you have your DOT tokens,when you lock them up in acala,you will be able to have a liquid version of them immediately that you can actually use to do other things like borrowing,add to the liquidity pool, when you stake tokens,apart from the minimum amount required,it will require you a minimum bonding and unbonding period. Let’s take cosmos ATOM for example,if you become tired of your staking position and you wish to exit it,you will be compelled to wait for 28 days,this is essential for network security but limits the user as sometimes a user may wish to have their coins in order to lay hold of time bound opportunity but with the homa protocol,**you can exit your stake anytime, so you are getting rewards from staking and having liquid tokens that you can use for anything of your choice to earn further rewards** ![How to stake with acala](https://storage.googleapis.com/papyrus_images/4e66d643214a3ba0764e001af7b0cc89c32325253a841ba327aa2eeb40f1a06b.png) How to stake with acala **The next thing is Swapping** So within acala,you will be able to swap tokens and pay transaction fees in either ACA or the currency you swapped. Transactions within acala are fast and cheap,the cost of transacting in ETH dapps have risen through the roof. There is also a liquidity pool within acala that anyone can deposit their tokens and earn rewards. ![Acala Dex](https://storage.googleapis.com/papyrus_images/810cb09cd3d443939c55973975012bd36bf4defe325b5ac94005fda1c98dad25.png) Acala Dex **Liquidity pools** The issue with decentralized exchange before now has been that of liquidity but now it has been resolved with liquidity pools. They are pools anyone can join,deposit their tokens and earn rewards. In acala,you can use ACA,L-DOT and others tokens. ![Liquidity pools in Acala](https://storage.googleapis.com/papyrus_images/223431a6b896e22e0f22b500e931fb72e9ff460543d38ac422c179d4c57e44cb.png) Liquidity pools in Acala **Get started today with** [**Acala**](https://acala.network/) **using** **Polkawallet** --- *Originally published on [Prcrypto](https://paragraph.com/@prcrypto/exploring-the-acala-ecosystem-using-polkawallet)*