Building a Decentralized Lending Protocol with Acala 2.1, Polkadot 0.9, and Substrate 4.0: A Step-by-Step Guide

Introduction to Decentralized Lending Protocols

When I first started exploring decentralized lending protocols, I was surprised by the complexity of the existing solutions. Most of them were built on top of Ethereum, which limited their scalability and usability. That's why I decided to build a decentralized lending protocol using Acala 2.1, Polkadot 0.9, and Substrate 4.0.

Setting Up the Development Environment

To start building our decentralized lending protocol, we need to set up our development environment. This includes installing the necessary dependencies, such as substrate-node and polkadot-js. We also need to create a new Substrate chain using the substrate-node command.

substrate-node --chain=mychain

Implementing the Lending Protocol Logic

Once we have our development environment set up, we can start implementing the lending protocol logic. This includes defining the smart contract functions for lending and borrowing, as well as the necessary storage and events.

// lending_protocol.js
import { Contract } from '@substrate/contract';

class LendingProtocol {
  constructor(contractAddress) {
    this.contract = new Contract(contractAddress, 'lending_protocol');
  }

  async lend(amount) {
    // Lending logic here
  }

  async borrow(amount) {
    // Borrowing logic here
  }
}

export default LendingProtocol;

Integrating with Acala 2.1 and Polkadot 0.9

To integrate our lending protocol with Acala 2.1 and Polkadot 0.9, we need to use the acala-js and polkadot-js libraries. We can use these libraries to interact with the Acala and Polkadot blockchains, respectively.

// integration.js
import { Acala } from '@acala-js';
import { Polkadot } from '@polkadot-js';

const acala = new Acala('ws://acala-node:9944');
const polkadot = new Polkadot('ws://polkadot-node:9944');

async function integrateLendingProtocol() {
  // Integration logic here
}

integrateLendingProtocol();

Testing and Deployment

Once we have implemented and integrated our lending protocol, we need to test and deploy it. We can use the jest testing framework to write unit tests for our smart contract functions.

// tests/lending_protocol.test.js
import LendingProtocol from '../lending_protocol';

describe('LendingProtocol', () => {
  it('should lend correctly', async () => {
    // Test lending logic here
  });

  it('should borrow correctly', async () => {
    // Test borrowing logic here
  });
});

We can then deploy our lending protocol to the Acala and Polkadot blockchains using the acala-js and polkadot-js libraries.

// deployment.js
import { Acala } from '@acala-js';
import { Polkadot } from '@polkadot-js';

const acala = new Acala('ws://acala-node:9944');
const polkadot = new Polkadot('ws://polkadot-node:9944');

async function deployLendingProtocol() {
  // Deployment logic here
}

deployLendingProtocol();

Conclusion

In this article, we have built a decentralized lending protocol using Acala 2.1, Polkadot 0.9, and Substrate 4.0. We have implemented the lending protocol logic, integrated it with Acala and Polkadot, and tested and deployed it. This protocol can be used to lend and borrow assets in a decentralized and trustless manner.