Polkadot Proposes Native Stablecoin dotUSD with $5 Million Initial Funding

The Polkadot community has submitted OpenGov Proposal No. 1944, aiming to create a native decentralized stablecoin, dotUSD, and establish it as the primary stable-value asset within the Polkadot ecosystem. The proposal is currently undergoing governance voting. According to the proposal, dotUSD will adopt an over-collateralization mechanism, allowing users to mint dotUSD by locking DOT in the future. The system will also include a stability pool, liquidation mechanism, and redemption mechanism to maintain its peg to the U.S. dollar. The proposal plans to use funds from the Polkadot Treasury to provide initial liquidity for the DOT/dotUSD liquidity pool, with $2.5 million in USDT used to mint dotUSD and an additional $2.5 million worth of DOT allocated to the liquidity pool, totaling $5 million in initial funding. dotUSD is planned to launch in phases, with the first phase using USDT as reserve support for minting, and the second phase introducing a full DOT collateral vault, oracle, stability pool, liquidation, and redemption mechanisms.