Polkadot Aims to Unlock DeFi Potential With Native pUSD Stablecoin
The Polkadot neighborhood 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 identical framework that beforehand powered Acala’s failed aUSD stablecoin.
Polkadot Community Backs pUSD to Reduce Reliance on USDT and USDC
According to 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 completely collateralized, decentralized stablecoin by focusing solely on DOT as collateral.
If authorized, it may scale back reliance on exterior stablecoins like USDT and USDC, whereas streamlining the OpenGov DOT-USDC/USDT conversion mechanism.
“This can be anticipated to be the NATIVE stablecoin for Polkadot Asset Hub, scale back/substitute dependence on USDT/USDC together with OpenGov DOT-USDC/USDT stablecoin conversion course of,” the proposal said.
Polkadot Treasury may additionally combine the stablecoin, enabling customers to make funds in pUSD as a substitute of DOT. This would remove the necessity for the Treasury to handle separate stablecoin reserves.
Additionally, it may additionally pave the way in which for utilizing pUSD for staking rewards, progressively changing DOT inflation over time.
Meanwhile, Polkadot’s push for a local stablecoin comes at a crucial juncture within the development of the blockchain network.
According to DeFi Llama data, the community hosts lower than $100 million in stablecoin belongings, a fraction of the liquidity accessible on Ethereum and Solana.
This scarcity has constrained decentralized finance exercise and restricted developer experimentation on Polkadot.
Considering this, Gavin Wood, Polkadot’s co-founder, burdened {that a} absolutely collateralized decentralized stablecoin is “strategically important.” He added that it wants to be deployed as quickly as doable 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,” Wood stated.
Notably, the proposal has already gained vital traction inside the neighborhood. The governance vote at present reveals 75.4% assist, inching towards the 85.6% threshold required for approval.
Meanwhile, the push for pUSD additionally aligns with a broader trade pattern of tasks launching native stablecoins to enhance liquidity and drive ecosystem growth.
The stablecoin trade, at present dominated by Tether’s USDT and Circle’s USDC, is projected to attain $4 trillion by 2030.
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