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Should Polkadot Hub have NATIVE pUSD based on the Honzon Protocol?
Background
Below is RFC-155, authored by Bryan Chen. Stablecoins are a central use of blockchains, with USDT and USDC being the dominant stablecoins in the Polkadot ecosystem. Earlier attempts to have an ecosystem wide "algorithmic" stablecoin (aUSD, based on Honzon) did not succeed for various reasons while current efforts (Hollar from Hydration, based on Aave) are underway but are considered third-party.
RFC 155, under consideration by the Polkadot Fellows, is to have DOT (and solely DOT) be the only source of collateral. This would be expected to be the NATIVE stablecoin for Polkadot Asset Hub, reduce/replace dependence on USDT/USDC including OpenGov DOT-USDC/USDT stablecoin conversion process.
A Polkadot Asset Hub "system chain" issuing its own stablecoin may be seen as a political threat to "third-party" stablecoin efforts (from parachains like Hydration to central issuers like Circle and Tether). While there are notoriously many technical issues involved in robust algorithm stablecoin design , the issues are not purely technical. We believe this kind of decision should involve the OpenGov DOT tokenholders and open the discussion to decentralized voices at large through this WFC.
Summary
pUSD (Polkadot USD over-collateralised debt token) is a new DOT-collateralized stablecoin deployed on Asset Hub. It is an overcollateralized stablecoin backed purely by DOT. The implementation follows the Honzon protocol pioneered by Acala. In addition, this RFC introduces an opt-in pUSD Savings module that lets holders lock pUSD to earn interest funded from stability fees.
Motivation
"Polkadot Hub should have a native DOT backed stable coin because people need it and otherwise we will haemorrhage benefits, liquidity and/or security." - Gav
Primary use cases of pUSD:
- As with any overcollateralized stablecoin, pUSD lets users borrow against their DOT so they can spend pUSD without selling DOT immediately.
- pUSD is designed to integrate with the Polkadot Treasury so payments can be made in pUSD instead of DOT, avoiding the need for the Treasury to manage a stablecoin reserve.
- Eventually pUSD may be used for staking rewards to replace DOT inflation.
- Passive holding option: pUSD holders can lock into the Savings module to earn interest, strengthening demand-side support for the peg.
Protocol Details
See RFC-155 for the latest version.
Voters
- An AYE vote means you support using Honzon for Polkadot native stablecoin
- A NAY vote means you do not support using Honzon for Polkadot native stablecoin
If you have comments on why you do or do not support having Polkadot Hub having NATIVE pUSD based on the Honzon Protocol please share!
Comments (32)
Proposal Failed
"The implementation follows the Honzon protocol pioneered by Acala".... Acala’s stablecoin (aUSD) launch was a complete disaster and it really killed my trust in the team. I don’t see myself supporting their project anymore. What I’d love to see is a proper, reliable, native solution. Honestly, it’s frustrating that with all the talent in the Polkadot/Substrate space, nobody has managed to build something better yet.
@13aVnfhvSoSZX1R78XhfG6T1DdNDQrkSaApwERijMPZDCrGH
Its a "MAN THE FUCK UP" thing (in the "man the ship" sense) -- human memory and emotions are such that when humans suffer a disaster, they remember it forever. Because the disaster and trauma is bigger in xlc's head (and gav's head) than in yours and mine, they will not repeat the same mistake. This is real security: the memory of PAIN. For this reason, pUSD will simply never suffer the same fate as aUSD -- too many people who give a shit have too many painful memories.
I wouldn't blame you for having more faith in USDC + USDT than in algorithmic stablecoins. At the end of the day, like America itself, USDC + USDT are already too big to fail. But I don't think we need to have pUSD compete with USDC and USDT for this to be a success. It just has to always work.
But does anyone have a suggestion for a better ticker than pUSD? 🥹
@Jay Chrawnna Pollar, Polkadollar, USDp. Anything but the homophone 🙈