Acala and Karura Propose February 2027 Network Shutdown

By Elena Vasquez

Acala and Karura have proposed shutting down on February 10, 2027, after seven years of development, according to a community letter. The plan requires approval through Acala referendum #195 and Karura referendum #137, so the announced schedule remains conditional on separate community votes.

Why are the networks closing?

Both networks have spent time in maintenance mode without significant protocol upgrades or growth, the team said. Their stablecoin, lending and liquid-staking products never developed the trading depth needed to operate safely and usefully at their intended scale.

Polkadot's multichain design divided liquidity, users and attention among parachains, while wallet infrastructure did not make transfers between them seamless. In its community letter, the team said: “Instead of one deep market, the ecosystem ended up with many shallow ones.”

DeFiLlama's chain dashboards dated Nov. 9 showed $257,223 in DeFi total value locked on Acala and $44,200 on Karura. Combined, those readings came to approximately $301,423, or less than $302,000, but they measure DeFi activity rather than the full inventory of assets awaiting withdrawal.

The basic reason for closure is simple: the planned products never gained enough trading depth.

What do the referendums decide?

The communities have been asked to approve the shutdown through separate governance referendums. The team says withdrawals and cross-chain routes will remain available during the exit period before both chains stop producing blocks. Approval remains a condition of that timetable.

Acala won Polkadot's first parachain auction, while Karura won Kusama's first, according to the 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.

The proposal now prioritizes an exit over the cross-chain expansion described in the letter.

When must users withdraw?

Under the proposal, users must withdraw external assets, including bridged USDT and USDC, DOT and KSM, before Feb. 10, 2027. Liquid-staking holders face earlier constraints because the underlying assets become available only after an unbonding period.

The deadlines differ by position:

• Ordinary LDOT: Holders must begin unbonding by Jan. 12, 2027, allowing 28 days for DOT to become available.
• Validator-bound LDOT: An additional 28-day unlock moves the cutoff to Dec. 16, 2026.
• LKSM: Holders must begin unbonding by Feb. 2, 2027, to accommodate the seven-day KSM waiting period.

aUSD and aSEED borrowers must repay their loans and free collateral before transferring assets out. Liquidity providers must remove liquidity first.

lcDOT holders are directed to withdraw through the Acala or Euphrates app. The team committed to maintaining collators, RPC nodes and valid coretime until the planned shutdown, keeping block production and withdrawal routes available.

Liquid-staking users face the earliest deadlines, so the final shutdown date is not the withdrawal date.

What happens to assets left behind?

Native ACA and KAR tokens cannot be withdrawn through the external-asset process and will remain on their respective chains after block production stops. The team intends to attempt returns of other assets left behind to the same owners' accounts on Polkadot or Kusama Asset Hub, but it explicitly warns that not every asset can be returned.

External assets in Acala's treasury would go to the Polkadot Treasury, while Karura's would go to the Kusama Treasury. Native treasury tokens would remain on their respective networks.

Stopped chains retain public code and a final state that someone could restart, the team said. Without active maintenance or monitoring, a governance flaw could expose assets left behind.

No recovery guarantee covers every balance left after the networks stop.

What does the aUSD incident reveal?

The community letter also revisited the August 2022 aUSD minting incident, which followed a configuration error involving the newly launched iBTC/aUSD pool. It did not identify that incident as a cause of the proposed shutdown.

Almost all mistakenly minted aUSD was recovered and burned, the team said, and the foundation used its own funds to cover the shortfall associated with assets that had left Acala. Operations resumed and circulating aUSD became fully collateralized again, but 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 asked 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.”

Recovering the mistakenly minted supply did not repair the stablecoin's reputation, according to the team. If both communities approve, the first binding deadline will be Dec. 16, 2026 for validator-bound LDOT, followed by the Feb. 10, 2027 stop to block production.