Polkadot’s dotUSD stablecoin referendum draws 97.5% approval in live vote

Polkadot’s OpenGov Referendum 1944 to launch a native, DOT-backed stablecoin called dotUSD is running at roughly 97.5% approval as it moves through the network’s deciding stage, according to Polkadot’s Subsquare governance platform.

The proposal would make dotUSD the network’s primary stable-value asset and fund a DOT/dotUSD liquidity pool on Polkadot Asset Hub with an initial $5 million in treasury liquidity.

Polkadot sets out a two-stage launch for dotUSD

The proposed rollout is deliberately structured in two phases.

The first phase provides a simpler route for bringing dotUSD into circulation while the infrastructure for the eventual DOT-backed system is completed. Under the proposal, users can mint the stablecoin on a one-to-one basis against USDT, subject to a governance-defined supply limit.

Because USDT would provide the initial backing, this stage does not require the oracle, collateral vaults or liquidation mechanisms planned for the final architecture. The proposal describes the approach as a stablecoin buffer designed to provide a straightforward starting point for liquidity and adoption.

Treasury funds would also be used to establish a DOT/dotUSD liquidity pool on Polkadot Hub. The current version of the proposal specifies $1.5 million in USDT to mint dotUSD and another $1.5 million worth of DOT for the initial pool, creating $3 million in proposed liquidity.

The asset would also receive “sufficient” status, meaning users could hold dotUSD without maintaining a separate DOT balance solely to keep their account active. Polkadot’s documentation explains that sufficient assets can keep an account alive without requiring the network’s native token.

Phase two represents the more ambitious part of the plan.

The system would introduce DOT-backed vaults, price oracles, a stability pool, liquidation mechanisms and a redemption system. The architecture is heavily inspired by Liquity v2’s BOLD stablecoin model, according to the referendum text.

DOT would become the engine behind the stablecoin

Under the proposed final architecture, users would lock DOT as collateral and borrow dotUSD against it at a lower value than their deposited assets.

For example, the proposal uses a hypothetical position containing 300 DOT valued at $5 each. That would produce $1,500 worth of collateral, against which the user could mint $1,000 of dotUSD at a 150% collateralization ratio. If DOT subsequently falls far enough to push the vault below its required collateralization level, the position could be liquidated.

The borrowing model would also give users control over their interest rates. Borrowers choosing lower rates would occupy earlier positions in the redemption queue, while users prepared to pay higher rates could make their collateral less likely to be selected during redemptions.

The system is designed to use market incentives to defend the dollar peg.

If dotUSD rises above $1, arbitrageurs could lock DOT, mint new dotUSD and sell it at the higher market price. The resulting increase in supply should put downward pressure on the token.

If the stablecoin falls below $1, traders could purchase it at a discount and redeem it through the protocol for $1 worth of DOT. That mechanism is intended to create buying pressure and push the price back toward its dollar target.

The proposal also includes a capped reserve of existing stablecoins that could be redeemed for $1, giving the system another tool for supporting the peg without immediately forcing sales of DOT collateral.

Liquidations would initially be absorbed by a stability pool funded by users depositing dotUSD. Participants would receive liquidated DOT at a discount, while the corresponding dotUSD would be burned to eliminate the debt. If the stability pool were exhausted, the proposal calls for collateral and debt to be redistributed across remaining vaults.

dotUSD arrives as Polkadot reshapes its economic model

The stablecoin proposal also fits into a broader overhaul of Polkadot’s monetary and treasury architecture.

Polkadot has moved toward a fixed maximum supply of 2.1 billion DOT and introduced the Dynamic Allocation Pool, an on-chain mechanism designed to direct newly issued DOT and other network income toward budgets determined through governance. The March 2026 runtime upgrade introduced the DAP as a permanent on-chain account.

That makes a native stablecoin potentially more than a DeFi product. It could become part of the network’s financial infrastructure.

The referendum argues that dollar-denominated obligations could eventually be settled using a stable asset controlled through Polkadot’s own governance rather than relying exclusively on third-party issuers.

That distinction matters because Polkadot already supports externally issued stablecoins. Its current documentation lists both USDt and USDC among assets available on Polkadot Hub.

The case for dotUSD is therefore partly about monetary sovereignty. Rather than importing stable-value liquidity from another issuer, the proposal seeks to create an asset whose issuance, collateral and governance are connected directly to Polkadot.

But the model also carries a fundamental risk: DOT would simultaneously serve as the network’s native asset and the principal collateral for its stablecoin. A severe DOT price decline could therefore place pressure on both sides of the system at the same time.

That reflexive relationship makes risk management critical as the project progresses from its initial stablecoin-backed phase to the planned DOT-collateralized architecture.

Polkadot’s Community Foundation has said its role under the proposal would be administrative rather than operational. It would not issue, control or custody dotUSD, DOT or USDT, with the stablecoin intended to function through on-chain rules rather than a centralized issuer.

The referendum’s implementation also depends on Polkadot system chains first being upgraded to version 2.5 under separate Referendum 1942.

For Polkadot, the vote is therefore about more than launching another stablecoin. Approval would set the groundwork for a native dollar-denominated financial layer, while the second phase would determine whether DOT can safely underpin that system at scale.

As Wood’s earlier endorsement of decentralized, DOT-collateralized stablecoins shows, the idea has been on Polkadot’s roadmap for more than a year. The latest referendum now puts that vision directly in the hands of the network’s governance process.