Polkadot Bets on pUSD Stablecoin — But Can It Escape aUSD’s Shadow?
Polkadot (DOT) is getting ready to launch a brand new stablecoin, pUSD, by way of the RFC-155 proposal. The Polkadot group is championing pUSD as a key answer to unleash its DeFi potential, reduce dependence on USDT/USDC, and increase ecosystem autonomy.
However, some are involved that they may repeat previous errors. pUSD is an over-collateralized stablecoin absolutely backed by DOT, deployed on Asset Hub, and using the Honzon protocol developed by Acala. Acala is the previous issuer of aUSD, a stablecoin venture that failed disastrously.
Can pUSD Stablecoin Avoid the Same Fate as aUSD?
Reusing Honzon – the framework Acala beforehand relied on to subject aUSD is elevating issues. That incident eroded belief within the Acala staff, with some even accusing them of “blaming a hack” whereas failing to compensate customers adequately.
“Acala’s stablecoin (aUSD) launch was a whole catastrophe and it actually killed my belief within the staff. I don’t see myself supporting their venture anymore. What I’d like to see is a correct, dependable, native answer. Honestly, it’s irritating that with all of the expertise within the Polkadot/Substrate house, no person has managed to construct one thing higher but.” – A group member shared.
Even those that help Polkadot launching its native stablecoin nonetheless see Honzon and Acala as classes that can not be ignored. They suggest the venture ought to “transfer ahead independently from the Acala staff.” In addition, they name for the Technical Council to take clear duty for governance.
“With these assurances, I might be ready to vote AYE. Without them, the chance of repeating previous errors is just too nice.” Another member noted.
Too Many Risks
Setting apart issues about Honzon and the Acala staff, Polkadot’s pUSD additionally faces skepticism throughout the group. One major cause is the construction that DOT solely backs it.
While the precise overcollateralization ratio stays unclear, this might set off liquidation cascades and add promoting strain on the token. Although the pUSD mannequin is safer than Terra’s UST as a result of it’s overcollateralized, relying solely on DOT as collateral introduces vital dangers.
Previously, MakerDAO’s DAI additionally began as ETH-only collateral. But at this time, MakerDAO supports Multi-Collateral DAI (MCD). They permit customers to again DAI with crypto belongings equivalent to ETH, WBTC, LINK, UNI, stETH, and even Real World Assets (RWAs) like US Treasuries.
“Backed solely by DOT, which might set off liquidation cascades and add extra promoting strain on the token. Remember the infamous DAI depeg in 2020, which compelled MakerDAO to diversify its collateral.” A person on X commented.
Additionally, one other X person identified that the Polkadot ecosystem already has extra superior native options like HOLLAR. The Hydration runtime builds this stablecoin, optimizes it for appchains, and positions it as superior to the legacy aUSD structure. Therefore, many argue that as a substitute of repeating a “common” EVM mannequin, Polkadot ought to leverage its distinctive strengths. This would allow the creation of a steady, safe answer worthy of its ecosystem’s potential.
pUSD is undoubtedly a strategic transfer by Polkadot to unlock DeFi potential. It might carry vital advantages if it proves safe and sees widespread adoption within the ecosystem. However, the ghost of aUSD’s failure continues to forged doubt throughout the group.
To keep away from repeating the identical errors, Polkadot should work to dispel these lingering issues. The indisputable fact that the DOT provide is capped at 2.1 billion, as reported by BeInCrypto, might assist gas the ecosystem’s development.
The put up Polkadot Bets on pUSD Stablecoin — But Can It Escape aUSD’s Shadow? appeared first on BeInCrypto.
