A proposal for Polkadot to create its own algorithmic stablecoin backed by DOT tokens is gaining strong support. The stablecoin, called pUSD, would leverage the Honzon protocol on the Acala network and reduce dependence on USDT and USDC. Over 75% of votes support the proposal, with $5.6 million worth of DOT used for voting.

The proposed pUSD stablecoin would be overcollateralized with DOT tokens and include a savings module for earning interest. The motivation behind the plan is to strengthen Polkadot’s ecosystem with a native stablecoin. Algorithmic stablecoins track fiat prices without centralized collateral, using onchain assets managed by smart contracts.

Algorithmic stablecoins have faced scrutiny following Terra’s UST collapse, but maintain interest due to their decentralized nature. This approach allows for a more permissionless design, potentially enabling the creation of “dark stablecoins” that bypass regulations. The stablecoin industry is facing increasing scrutiny and challenges in its quest for stability and decentralization.

Read more at Cointelegraph: Polkadot votes on a native algorithmic stablecoin