Two pioneer protocols in the Polkadot ecosystem are preparing to wind down operations. The development team behind Acala and its sister network, Karura, has announced plans for a complete network shutdown on February 10, 2027, following seven years of operation. The move marks the final chapter for the first two parachain slot auction winners in their respective ecosystems, when Acala secured the first slot on Polkadot and Karura won the inaugural slot on Kusama.
The shutdown proposal has been submitted to the community, with the final decision subject to governance referendums across both networks.
Why Liquidity in This Ecosystem Dried Up
Drying decentralized finance (DeFi) liquidity across Polkadot and Kusama served as the primary catalyst for the proposal. The development team noted that Polkadot’s multichain architecture fragmented liquidity across shallow markets on various parachains, rather than pooling it into a single, deep centralized market. This challenge was further compounded by wallet infrastructure that struggled to facilitate seamless cross-parachain transfers.
Beyond network structural challenges, the team pointed to the erroneous minting incident involving the aUSD stablecoin in August 2022. A technical flaw in the iBTC/aUSD liquidity pool at the time triggered the accidental minting of tokens. Although nearly all aUSD was recovered, burned, and fully collateralized again, public trust in the stablecoin never completely recovered.
Asset Withdrawal Deadlines and Unbonding Rules
Users must withdraw all holdings of DOT, KSM, and bridged external assets such as USDT and USDC prior to the February 10, 2027 shutdown date. Borrowers with active aUSD or aSEED stablecoin loans must repay their obligations and release collateral before moving assets out. Meanwhile, liquidity providers need to redeem their liquidity first, and lcDOT holders are instructed to process withdrawals via the Acala or Euphrates apps.
For liquid staking holders, the timeline is significantly tighter due to network unbonding periods. Holders with LDOT positions locked to specific validators face the earliest deadline on December 16, 2026, as an additional 28 days are required. Standard LDOT holders must begin the unbonding process no later than January 12, 2027, to ensure the 28-day waiting period concludes on time. For LKSM holders, the deadline to initiate unbonding is February 2, 2027, based on a seven-day unbonding period.
Fate of Treasury Reserves and Native Tokens
The external asset withdrawal process does not apply to the networks’ native tokens, ACA and KAR. Both tokens will remain on their respective blockchains with no option for cross-chain withdrawals. For external assets remaining in the treasuries on the shutdown date, the team plans to donate Acala’s balances to the Polkadot Treasury and transfer Karura’s funds to the Kusama Treasury.
The development team has committed to maintaining collator nodes, RPC nodes, and valid coretime until February 10, 2027, ensuring bridge routes and user claims function normally. The final decision now rests on referendum voting results and users’ diligence in unwinding their positions before deadlines expire.
Reported by crypto.news.
Also read: What Is DeFi (Decentralized Finance)?
Disclaimer: This article is for informational and educational purposes only, not financial advice. Cryptocurrency assets are highly volatile and carry significant risk. Always do your own research (DYOR) and never invest more than you can afford to lose.
