Polkadot Proposes Native Stablecoin dotUSD With $5 Million Treasury Funding

Polkadot is considering launching its native stablecoin, called dotUSD, through its OpenGov governance system. If approved, the proposal will consume approximately $5 million of the network's treasury.

The proposal was initiated by community members across the Polkadot ecosystem and submitted via the Polkadot Community Foundation. The foundation's role is limited to presenting it for a community vote.

According to the plan, the first dotUSD tokens would be minted using approximately $2.5 million worth of assets. Initial liquidity would be provided by another $2.5 million in DOT, which could be used for a DOT and dotUSD trading pool on Polkadot Asset Hub.

The proposal also includes a Peg Stability Module, which would establish key rules for the stablecoin, such as initial minting restrictions. Importantly, DOT would not be the primary asset used to back the issuance, but rather existing stablecoin reserves.