The Polkadot group is shifting towards launching a local stablecoin, pUSD, backed totally 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 Scale back Reliance on USDT and USDC
In accordance with the proposal, pUSD is structured as an over-collateralized debt token, permitting customers to borrow in opposition to their DOT holdings with out liquidating them.
PUSD goals to handle previous shortcomings and supply the community with a totally collateralized, decentralized stablecoin by focusing solely on DOT as collateral.
If accepted, it may scale back reliance on exterior stablecoins like USDT and USDC, whereas streamlining the OpenGov DOT-USDC/USDT conversion mechanism.
“This would be expected to be the NATIVE stablecoin for Polkadot Asset Hub, reduce/replace dependence on USDT/USDC including OpenGov DOT-USDC/USDT stablecoin conversion process,” the proposal acknowledged.
Polkadot Treasury may additionally combine the stablecoin, enabling customers to make funds in pUSD as an alternative of DOT. This is able to remove the necessity for the Treasury to handle separate stablecoin reserves.
Moreover, it may additionally pave the best way for utilizing pUSD for staking rewards, progressively changing DOT inflation over time.
In the meantime, Polkadot’s push for a local stablecoin comes at a important juncture within the growth of the blockchain community.
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In accordance with DeFi Llama knowledge, the community hosts lower than $100 million in stablecoin property, a fraction of the liquidity accessible on Ethereum and Solana.
Polkadot Stablecoin Market Cap. Supply: DeFiLlama
This scarcity has constrained decentralized finance exercise and restricted developer experimentation on Polkadot.
Contemplating this, Gavin Wooden, Polkadot’s co-founder, pressured {that a} absolutely collateralized decentralized stablecoin is “strategically essential.” He added that it must be deployed as quickly as doable to unlock the community’s monetary potential.
“Polkadot Hub should have a native DOT backed stable coin because people need it and otherwise we will haemorrhage benefits, liquidity and/or security,” Wooden stated.
Notably, the proposal has already gained important traction throughout the group. The governance vote at the moment 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 development of tasks launching native stablecoins to reinforce liquidity and drive ecosystem progress.
The stablecoin trade, at the moment dominated by Tether’s USDT and Circle’s USDC, is projected to succeed in $4 trillion by 2030.
