Closure of Acala and Karura: Polkadot loses its DeFi pioneers

The curtain falls on Polkadot DeFi. Monday, November 9, the Acala team announced the closure of Acala and Karura, its two networks operated for more than five years. The first runs on Polkadot, the second on Kusama, its experimental cousin. Unless token holders refuse, both chains will stop producing blocks on February 10, 2027.

The key points of this article:

Acala and Karura will stop producing blocks on February 10, 2027, if two referendums pass.

External assets like DOT, KSM, USDT and USDC must be withdrawn before complete shutdown.

The native ACA and KAR tokens will not be able to leave their respective chains.

Acala cites insufficient DeFi liquidity after seven years of development of both networks.

An extinction voted for by token holders

Nothing is sealed yet. The closure is contingent on two governance votes, Acala Referendum #195 and Karura Referendum #137, which ACA and KAR holders must still approve.

The reason can be summed up in one word: liquidity. In its letter to the community, the team explains that the necessary liquidity depth has never been reached, neither on Polkadot nor on Kusama. Both networks were running in maintenance mode, with no upgrades or growth.

A parachain is a satellite blockchain, which inherits the security of Polkadot or Kusama. Karura won Kusama's first ever parachain auction in 2021, with over half a million KSM pledged by the community.

Acala did just as well on Polkadot a few months later, with 32.5 million DOT blocked by 81,000 contributors. That's more than a billion dollars at the price then.

The journey had not always been smooth, and a bug had already shaken Acala's native stablecoin in 2022, suddenly falling from its anchor.

The team has published a withdrawal guide that details each deadline, with the same last day for all external assets, February 10, 2027. After this day, nothing moves on both networks.

A chain that stops producing blocks freezes, and no more transactions go through. The funds left on it remain there, with no return date.

The schedule gives users three months, and both networks will continue to operate normally until the last block.

Liquid staking token holders need to get started much earlier. LDOT, DOTs staking but remaining transferable, must be released before January 12, 2027.

For example, the operation takes a full 28 days, and a holder who waits until the New Year would already have almost no margin left.

For the LKSM, the equivalent of Kusama, the limit falls on February 2, 2027, for a faster unlocking this time.

Other assets follow a more direct path, with DOT, KSM, USDT and USDC to be bridged to Asset Hub or the central chain of their ecosystem.

Home applications also require a passage before release. Liquidity providers withdraw their tokens from the pools, and users of Euphrates, the in-house yield application, close their positions before the bridge.

No output, however, for native tokens. ACA and KAR will remain on their chains until the end, and the team advises keeping some, as they pay the fees for each transaction.

The team finally warns against end-of-course scams. Only the official links from Acala and Karura are authentic, and the team will never ask for your seed phrase, neither in private message nor elsewhere.