Polkadot weighs native DOT-backed algorithmic stablecoin

The Polkadot community is showing strong initial backing for a proposal to launch pUSD, an algorithmic stablecoin fully backed by DOT tokens. Proposed by Bryan Chen, co-founder of Acala, the stablecoin aims to strengthen Polkadot's ecosystem. The vote indicates that over three-quarters of the community supports the initiative, with over 1.4 million DOT worth around $5.6 million used in votes so far. The pUSD would utilize the Honzon protocol on Acala, designed to reduce reliance on popular stablecoins like Tether's USDt and Circle's USDC. This proposed stablecoin will be overcollateralized and include an optional savings module for holders to earn interest from stability fees. Despite the controversy surrounding algorithmic stablecoins following the collapse of Terra, they continue to attract interest due to their decentralization and promise of a permissionless design. Chen argues that having a native DOT-backed stablecoin is crucial for Polkadot to avoid losing liquidity and security benefits.

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