Polkadot governance is advancing Referendum #1944 to establish dotUSD, a native stablecoin backed by DOT collateral. The proposal has garnered 97.5 percent support in an initial governance snapshot.
dotUSD will roll out in two phases: an initial stage minting against USDT, followed by a second phase enabling users to lock DOT in vaults to mint the stablecoin. The protocol will use liquidations and a stability pool to maintain the peg.
The stablecoin integrates with Polkadot's fixed DOT supply and Dynamic Allocation Pool model, alongside governance-driven token burns designed to curb inflation.
DOT surged 16.7 percent on the day and 42.5 percent on the week, outpacing Bitcoin, which fell 0.83 percent to $78,539. On-chain activity spiked 150 percent. The move appears driven by a rotation into lower-liquidity layer-1 tokens during a short squeeze.
Institutional headwinds have emerged alongside the rally. Grayscale Investments withdrew its SEC registration for a Polkadot ETF, stating it has no intention to launch the product. The withdrawal undercuts the network's push to strengthen its DeFi ecosystem through tokenomics and protocol innovation.
DOT has declined 54 percent year-to-date. The sustainability of the recent rally hinges on successful token burn implementation and whether governance-driven supply reduction can support the price.
