Polkadot Community Proposes Native Decentralized Stablecoin dotUSD

Polkadot community members have introduced OpenGov Proposal No. 1944 to create a native decentralized stablecoin called dotUSD and establish it as the ecosystem’s primary stable-value asset. According to Odaily, the proposal is now undergoing governance voting. The proposal says dotUSD would use an overcollateralized model, allowing users to mint the token by locking DOT in the future. It also outlines a stability pool, liquidation mechanism, and redemption mechanism to help maintain its peg to the U.S. dollar. The plan would use Polkadot treasury funds to provide initial liquidity for the DOT/dotUSD pool, including $2.5 million in USDT for minting dotUSD and another $2.5 million worth of DOT for the liquidity pool, for a total of $5 million in initial funding. The rollout is planned in phases, with the first stage using USDT as reserve backing and the second stage adding a full DOT collateral vault, oracle, stability pool, liquidation, and redemption mechanisms.