Bryan Chen, Acala's chief technology officer and co-founder, presented a proposal on Sunday for developing pUSD, a native stablecoin exclusively collateralized by DOT tokens. The initiative seeks to establish an algorithmic stablecoin directly within the Polkadot ecosystem, addressing current dependencies on external stablecoins.
The voting process shows substantial early backing, with over 75% of participants supporting the measure. More than 1.4 million DOT tokens, valued at approximately $5.6 million, have been committed to the ballot so far. The voting period extends for another 24 days before final results are determined.
The proposed pUSD would function through Acala's Honzon protocol, which specializes in decentralized stablecoins and collateralized debt positions. Chen's motivation centers on ecosystem strengthening, arguing that Polkadot Hub requires its own DOT-backed stablecoin to prevent loss of liquidity, benefits, and security to external platforms.
Under the proposed design, pUSD would operate as an overcollateralized debt token. An optional savings module would allow holders to lock their stablecoins and generate interest through stability fees collected by the system.
The stablecoin aims to reduce reliance on USDT and USDC, which currently dominate the stablecoin market. Chen's proposal emphasizes maintaining Polkadot's value within its own ecosystem rather than directing it to centralized alternatives managed by external entities.
Algorithmic stablecoins maintain their peg through economic incentives programmed into smart contracts rather than centralized collateral. The approach uses digital assets held on-chain as backing, with all management executed through automated protocols without third‑party intermediaries.
The category remains contentious following Terra's TerraUSD collapse, which devastated that entire ecosystem. Despite this history, algorithmic stablecoins continue to attract attention due to their decentralization advantages and permissionless design characteristics.
CryptoQuant CEO Ki Young Ju noted in early May that this stablecoin architecture could enable the creation of “dark stablecoins” operating outside regulatory frameworks. The permissionless nature allows for designs that may not comply with traditional sanction enforcement or regulatory requirements.