Polkadot Launches Stablecoin 'dotUSD' Under DAO Governance with USDT Issuance and US Treasury Seed Funding

Polkadot Launches Stablecoin 'dotUSD'

Polkadot launched its new native stablecoin 'dotUSD' on its mainnet on October 8, 2026 (Thursday), under the management of the on-chain decentralized governance system "OpenGov."

dotUSD is live on Polkadot. Today a handful of companies issue and control most of the world's stablecoins worth more than $250B. Like banks, they decide who can hold them and who can't. dotUSD is based on a different premise. It has no issuing company and no single point of control. The DOT DAO governs it through OpenGov. Polkadot now has a stablecoin that belongs to its network.

--- Polkadot (@Polkadot) October 8, 2026

The launch of dotUSD was officially approved in the Polkadot OpenGov referendum 1944, gathering overwhelming support of approximately 98.4%, with about 4.3 million DOT votes in favor.

To secure initial liquidity for the project, funding is being drawn from the Polkadot treasury (financial fund). The initial plan allocated a total of $5 million (approximately 790 million yen) for the issuance of dotUSD and liquidity pools, with $2.5 million each. However, due to subsequent amendments, this was reduced to $1.5 million (approximately 237 million yen) each, resulting in a total of $3 million (approximately 470 million yen) in U.S. Treasury bonds and funds being utilized as seed capital.

The Polkadot Community Foundation, which submitted this proposal, has indicated that it will strictly maintain a managerial role and will not be involved in the issuance, operation, or custody of the tokens.

Initial Phase Reality: Contradictions and Dependencies with Tether's USDT

While dotUSD claims to have "no issuing entity," there are contradictions and concerns regarding its design and reality in the initial launch phase.

Under the current mechanism, users can mint (issue) dotUSD at a 1:1 ratio with USDT issued by Tether until the supply cap is reached. USDT is a representative dollar-pegged token that is centrally managed, which is the very model that Polkadot has previously warned against as "to be avoided."

Furthermore, each dotUSD issued in the first phase represents a claim against 1 USDT held as reserves. Therefore, if Tether freezes the wallet holding the reserves, the backing assets of dotUSD would also be at risk.

In recent years, Tether has frequently blacklisted addresses and frozen wallets, and legal troubles and lawsuits have been reported, leading to the view that dependence on centralized stablecoins is a "double-edged sword."

Outlook for Phase 2 Aiming for Complete Decentralization

The current operation backed by USDT is positioned as a bridge until a fully decentralized system is established.

In the upcoming Phase 2, vaults backed by DOT, price oracles, stabilization pools, liquidation functions, and redemption mechanisms are expected to be implemented in the system. This plan aims to completely eliminate USDT from the reserve assets and transition to a design of autonomous collateralized debt based on models like Liquity.

The exact release date for Phase 2 has not yet been determined, but this initiative, which has garnered attention since co-founder Gavin Wood mentioned it, continues to attract market interest regarding whether it can truly evolve into a unique decentralized stablecoin.

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