TL;DR:

The Pendulum team has built Spacewalk, a decentralized bridge between the Stellar and Polkadot ecosystems, and plans to request 25000 DOT from the treasury as collateral for bridging assets.

Objective:

We aim to link Stellar and Polkadot, two major OG blockchain ecosystems, by enabling the use of Stellar's XLM token and its vast array of stablecoins and standardized fiat ramps. With Spacewalk any Polkadot application can directly connect to fiat liquidity in countries like Australia, Canada, Brazil, Argentina, Mexico, Tanzania and simplify user onboarding to Polkadot's DeFi world.

Using DOT as collateral for the Spacewalk vaults ensures security and expands the number of assets that can be transferred between the networks. Spacewalk uses a decentralized vault system, similar to InterBTC’s mechanism, to ensure secure transfers. This proposal should lead to new liquidity and opportunities for the Polkadot community from Stellar's established ecosystem and fiat-connected infrastructure.

Implementation:

The Spacewalk bridge is now live on Pendulum. Try here.

These funds would be managed with the appropriate level of security:

• e.g. a multi-sig co-owned by the community and Pendulum / SP team members.
• Highly secure collateralization factor to minimize the risk of liquidation.

Further additions of DOT collateral can be requested as demand increases. Within the Polkadot community, the necessity for technical expertise to directly manage a vault would not be needed in the initial phase as the SatoshiPay team will oversee this process.

The proposal would include:

• A one-year lock-up period for the collateral
• Full loan to be returned after one year
• Reduced liquidation risk with the DOT community having deciding power over the overcollateralization amount above the 160% standard (Vault collaterization Github code here)
• Vaults managed by SatoshiPay, a blockchain technology company since 2014, Stellar partner since 2017, and builder of Polkadot’s parachain Pendulum

Conclusion:

This proposal would aim to tightly integrate Stellar and Polkadot via Pendulum's Spacewalk bridge, enhancing liquidity and interoperability. We invite feedback and support from the Polkadot community as we embark on this exciting journey towards an interoperable cross-chain future.