Acala and its sister network Karura have proposed shutting down on Feb. 10, 2027, after seven years of development, citing insufficient DeFi liquidity across Polkadot and Kusama.
Summary
- Shutdown plans depend on approval of Acala referendum #195 and Karura referendum #137.
- Users must withdraw external assets before February, with earlier deadlines for liquid-staking positions.
- Native ACA and KAR tokens will remain on their respective chains after block production stops.
- Remaining external assets face a best-effort return process, with no guarantee every asset can be recovered.
Acala’s team outlined the proposed closure in a community letter, saying both networks have spent some time in maintenance mode without significant protocol upgrades or growth. The plan would keep withdrawals and cross-chain routes running during the exit period before both chains stop producing blocks.
The communities have been asked to vote on the shutdown through separate governance referendums. Approval remains a condition of the announced timetable.
Acala blames fragmented markets for the shutdown plan
In its explanation, the team said the trading depth needed to support its stablecoin, lending and liquid-staking products never developed on Polkadot or Kusama.
“Instead of one deep market, the ecosystem ended up with many shallow ones,” the letter said.
According to the team, Polkadot’s multichain design divided liquidity, users and attention among parachains, while wallet infrastructure failed to make transfers between them seamless. Without sufficiently deep markets, its products could not operate safely or usefully at their intended scale.
DefiLlama’s chain dashboards dated Nov. 9 displayed $257,223 in DeFi total value locked on Acala and $44,200 on Karura. Those headline readings total approximately $301,423; they are DeFi measurements, not a complete inventory of assets awaiting withdrawal.
The proposed closures involve two early parachain auction winners. Acala secured Polkadot’s first auction, while Karura won Kusama’s first, according to the community letter.
Earlier expansion efforts included a Wormhole integration announced in 2022 to connect the networks with assets from other blockchains. An Astar partnership that year sought to bring Acala’s DeFi products to another Polkadot parachain.
Liquid-staking holders face earlier withdrawal deadlines
Under the proposed schedule, users must remove DOT, KSM, and external assets bridged onto either network, including USDT and USDC, before Feb. 10, 2027.
Liquid-staking holders have less time to begin the process because their underlying assets are released after an unbonding period.
For ordinary LDOT positions, the team set Jan. 12, 2027, as the unbonding deadline, allowing 28 days for DOT to become available. LDOT locked to a specific validator requires another 28 days to unlock first, bringing that earlier cutoff to Dec. 16, 2026.
LKSM holders must begin unbonding by Feb. 2, 2027, to accommodate the seven-day KSM waiting period.
The withdrawal instructions require users with aUSD or aSEED loans to repay them and free their collateral before transferring assets out. Liquidity providers must remove their liquidity first, while lcDOT holders are directed to withdraw through the Acala or Euphrates app.
To support the exit period, the team committed to maintaining collators, RPC nodes and valid coretime until the planned shutdown, keeping block production and withdrawal routes available.
ACA and KAR are excluded from the asset-return plan
Native ACA and KAR tokens cannot be withdrawn through the external-asset process and will remain on their chains, the letter said.
For other assets left behind, the team intends to attempt returns to the same owners’ accounts on Polkadot or Kusama Asset Hub. It explicitly warned that not every asset can be returned through that arrangement.
External assets held by Acala’s treasury would be donated to the Polkadot Treasury, while Karura’s would go to the Kusama Treasury. Native treasury tokens would remain on their respective networks.
The team explained that stopped chains retain public code and a final state that someone could restart. Without active maintenance or monitoring, it warned, a governance flaw could expose assets left behind.
The aUSD incident left lasting damage
The letter revisited Acala’s August 2022 aUSD minting incident, which followed a configuration error involving the newly launched iBTC/aUSD pool.
According to the team, almost all mistakenly minted aUSD was recovered and burned, and the foundation used its own funds to cover the shortfall associated with assets that had left Acala.
Although operations resumed and circulating aUSD became fully collateralized again, the team acknowledged that the stablecoin never fully regained users’ trust.
Replies to the announcement included complaints about crowdloan losses, unresolved stablecoin holdings, and the proposed treasury donations. One commenter questioned why treasury assets were not being returned to users.
The team warned that it would never initiate direct messages, request seed phrases or private keys, or ask users to send funds during the wind-down.
