The Polkadot community is progressing towards the launch of a native stablecoin, pUSD, which will be fully backed by its DOT token.
The proposal suggests the creation of the DOT-collateralized stablecoin on the Polkadot Asset Hub using the Honzon protocol stack, the same framework that previously supported Acala’s aUSD stablecoin.
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Polkadot Community Supports pUSD to Decrease Dependence on USDT and USDC
As per the proposal, pUSD will function as an over-collateralized debt token, allowing users to utilize their DOT holdings to borrow without selling them.
PUSD aims to rectify previous issues and offer the network a fully collateralized, decentralized stablecoin that focuses exclusively on DOT as collateral.
If approved, it could lessen the dependence on external stablecoins such as USDT and USDC, while simplifying the OpenGov DOT-USDC/USDT conversion process.
“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 stated.
The Polkadot Treasury might also integrate the stablecoin, enabling users to transact in pUSD instead of DOT, thereby eliminating the need for separate stablecoin reserves.
Furthermore, it could potentially facilitate the use of pUSD for staking rewards, gradually replacing DOT inflation over time.
As Polkadot moves toward a native stablecoin, it arrives at a crucial point in its blockchain network development.
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According to DeFi Llama data, the network has under $100 million in stablecoin assets, a mere fraction compared to the liquidity on Ethereum and Solana.
This deficiency has limited decentralized finance activities and stifled developer innovation on Polkadot.
In light of this, Gavin Wood, co-founder of Polkadot, emphasized that a fully collateralized decentralized stablecoin is “strategically essential” and must be deployed swiftly to unlock the network’s financial potential.
“Polkadot Hub should have a native DOT backed stablecoin because people need it and otherwise we will haemorrhage benefits, liquidity and/or security,” Wood stated.
Importantly, the proposal has garnered substantial support within the community, with governance votes currently showing 75.4% approval, nearing the 85.6% threshold needed for acceptance.
Moreover, the push for pUSD aligns with a wider industry trend of projects introducing native stablecoins to boost liquidity and foster ecosystem expansion.
The stablecoin sector, largely dominated by Tether’s USDT and Circle’s USDC, is anticipated to reach $4 trillion by 2030.
