The Polkadot group is transferring towards launching a local stablecoin, pUSD, backed solely by its DOT token.
The proposal requires deploying the DOT-collateralized stablecoin on the Polkadot Asset Hub utilizing the Honzon protocol stack. This is similar framework that beforehand powered Acala’s failed aUSD stablecoin.
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Polkadot Neighborhood Backs pUSD to Cut back Reliance on USDT and USDC
Based on the proposal, pUSD is structured as an over-collateralized debt token, permitting customers to borrow towards their DOT holdings with out liquidating them.
PUSD goals to handle previous shortcomings and supply the community with a completely collateralized, decentralized stablecoin by focusing solely on DOT as collateral.
If accredited, it might cut back reliance on exterior stablecoins like USDT and USDC, whereas streamlining the OpenGov DOT-USDC/USDT conversion mechanism.
“This may be anticipated to be the NATIVE stablecoin for Polkadot Asset Hub, cut back/substitute dependence on USDT/USDC together with OpenGov DOT-USDC/USDT stablecoin conversion course of,” the proposal said.
Polkadot Treasury might additionally combine the stablecoin, enabling customers to make funds in pUSD as a substitute of DOT. This may get rid of the necessity for the Treasury to handle separate stablecoin reserves.
Moreover, it might additionally pave the best way for utilizing pUSD for staking rewards, steadily changing DOT inflation over time.
In the meantime, Polkadot’s push for a local stablecoin comes at a essential juncture within the improvement of the blockchain community.
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Based on DeFi Llama information, the community hosts lower than $100 million in stablecoin property, a fraction of the liquidity obtainable on Ethereum and Solana.
This scarcity has constrained decentralized finance exercise and restricted developer experimentation on Polkadot.
Contemplating this, Gavin Wooden, Polkadot’s co-founder, confused {that a} absolutely collateralized decentralized stablecoin is “strategically important.” He added that it must be deployed as quickly as potential to unlock the community’s monetary potential.
“Polkadot Hub ought to have a local DOT backed secure coin as a result of individuals want it and in any other case we are going to haemorrhage advantages, liquidity and/or safety,” Wooden mentioned.
Notably, the proposal has already gained vital traction inside the group. The governance vote presently reveals 75.4% help, inching towards the 85.6% threshold required for approval.
In the meantime, the push for pUSD additionally aligns with a broader trade pattern of tasks launching native stablecoins to reinforce liquidity and drive ecosystem progress.
The stablecoin trade, presently dominated by Tether’s USDT and Circle’s USDC, is projected to achieve $4 trillion by 2030.