From 53e51fc0d5136b4b0a95c310adc22fa15cd64e0f Mon Sep 17 00:00:00 2001 From: Bryan Chen Date: Tue, 23 Sep 2025 15:59:32 +1200 Subject: [PATCH] pUSD --- .../{0155-polkadot-dollar.md => 0155-pUSD.md} | 52 +++++++++---------- 1 file changed, 26 insertions(+), 26 deletions(-) rename text/{0155-polkadot-dollar.md => 0155-pUSD.md} (78%) diff --git a/text/0155-polkadot-dollar.md b/text/0155-pUSD.md similarity index 78% rename from text/0155-polkadot-dollar.md rename to text/0155-pUSD.md index 0a5fb44..c041184 100644 --- a/text/0155-polkadot-dollar.md +++ b/text/0155-pUSD.md @@ -1,4 +1,4 @@ -# RFC-0155: Polkadot$ +# RFC-0155: pUSD (Polkadot USD over-collateralised debt token) | | | | --------------- | --------------------------------------------------------------- | @@ -8,41 +8,41 @@ ## Summary -Polkadot$ / Polkadot Dollar / PDD (exact name TBD) 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 PDD Savings module that lets holders lock PDD to earn interest funded from stability fees. +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 PDD: -- As with any overcollateralized stablecoin, PDD lets users borrow against their DOT so they can spend PDD without selling DOT immediately. -- PDD is designed to integrate with the Polkadot Treasury so payments can be made in PDD instead of DOT, avoiding the need for the Treasury to manage a stablecoin reserve. -- Eventually PDD may be used for staking rewards to replace DOT inflation. -- Passive holding option: PDD holders can lock into the Savings module to earn interest, strengthening demand-side support for the peg. +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. ## Stakeholders -- PDD holders +- pUSD holders - Polkadot Treasury - Ecosystem projects - Protocol developers ## Explanation -PDD is implemented using the Honzon protocol stack used to power aUSD, adapted for DOT-only collateral on Asset Hub. +pUSD is implemented using the Honzon protocol stack used to power aUSD, adapted for DOT-only collateral on Asset Hub. ### Protocol Overview The Honzon protocol functions as a lending system where users can: 1. **Deposit collateral**: Lock DOT as collateral in Collateralized Debt Positions (CDPs). -2. **Mint PDD**: Generate PDD stablecoins against collateral value. +2. **Mint pUSD**: Generate pUSD stablecoins against collateral value. 3. **Accrue interest**: Pay interest over time via the debit exchange rate (stability fee). 4. **Maintain health**: Keep CDPs above the liquidation ratio to avoid liquidation. 5. **Liquidation**: Underwater CDPs are liquidated via DEX and/or auctions to keep the system solvent. ### Oracle Infrastructure -The PDD system relies on robust oracle infrastructure to maintain accurate price feeds for DOT and ensure proper collateral valuations. +The pUSD system relies on robust oracle infrastructure to maintain accurate price feeds for DOT and ensure proper collateral valuations. **Oracle source** - **DEX price feeds**: Real-time DOT prices aggregated from decentralized exchanges across parachains via XCM messaging or state-proofs. A time-weighted average price (TWAP) will be used to resist short-term manipulation. @@ -52,11 +52,11 @@ The PDD system relies on robust oracle infrastructure to maintain accurate price ### Issuance -DOT holders can open a vault (CDP) to lock their DOT and borrow up to a protocol-defined percentage of its value as PDD, subject to a required collateral ratio and debt ceilings. +DOT holders can open a vault (CDP) to lock their DOT and borrow up to a protocol-defined percentage of its value as pUSD, subject to a required collateral ratio and debt ceilings. ### Redemption -At any time, the vault owner can repay PDD (principal plus accrued interest via the debit exchange rate) to unlock DOT, fully or partially. +At any time, the vault owner can repay pUSD (principal plus accrued interest via the debit exchange rate) to unlock DOT, fully or partially. ### Liquidation @@ -81,17 +81,17 @@ When a vault's collateral ratio falls below the liquidation ratio, it becomes un Any excess collateral after repaying debt and penalties is refunded to the owner. Shortfalls become bad debt and are handled by CDP treasury mechanisms. -### Incentives: PDD Savings (opt-in) +### Incentives: pUSD Savings (opt-in) -The protocol includes a Savings module that allows PDD holders to lock tokens and earn interest paid from stability fees. +The protocol includes a Savings module that allows pUSD holders to lock tokens and earn interest paid from stability fees. **Design goals** -- Create baseline demand for PDD, improving peg robustness. +- Create baseline demand for pUSD, improving peg robustness. - Return a configurable share of stability fees to long-term holders after safety buffers. - Keep UX simple and native to Asset Hub. **Mechanics** -- **Locking**: Users deposit PDD into the Savings pallet to receive an internal savings balance (no separate token required) or an sPDD receipt token (implementation choice). +- **Locking**: Users deposit pUSD into the Savings pallet to receive an internal savings balance (no separate token required) or an spUSD receipt token (implementation choice). - **Interest source**: Interest is funded by the stability fees collected from CDP debt via the debit exchange rate. - **Distribution rule (waterfall)**: 1. Cover realized bad debt. @@ -119,7 +119,7 @@ Governance-managed parameters include (non-exhaustive): ### Emergency Shutdown -As a last resort, an emergency shutdown can be performed by the Fellowship to halt minting/liquidation and allow equitable settlement: lock oracle prices, cancel auctions, and let users settle PDD against collateral at the locked rates. Savings deposits remain redeemable 1:1 for PDD at the last savings index; interest accrual stops at shutdown. +As a last resort, an emergency shutdown can be performed by the Fellowship to halt minting/liquidation and allow equitable settlement: lock oracle prices, cancel auctions, and let users settle pUSD against collateral at the locked rates. Savings deposits remain redeemable 1:1 for pUSD at the last savings index; interest accrual stops at shutdown. ## Drawbacks @@ -155,14 +155,14 @@ This proposal introduces necessary computational overhead to Asset Hub for CDP m The proposal optimizes for several key usage patterns: -- **Treasury integration**: Treasury payment workflows are streamlined with native PDD support, eliminating the need for complex stablecoin reserve management and reducing operational overhead for Treasury administrators. -- **Holder experience**: A single "Earn with Savings" flow with clear APR and risk notes encourages organic PDD demand without leverage. +- **Treasury integration**: Treasury payment workflows are streamlined with native pUSD support, eliminating the need for complex stablecoin reserve management and reducing operational overhead for Treasury administrators. +- **Holder experience**: A single "Earn with Savings" flow with clear APR and risk notes encourages organic pUSD demand without leverage. - **Developer integration**: Asset Hub's native asset infrastructure allows seamless integration with existing wallets and DeFi protocols without requiring new asset registration flows or custom interfaces. ### Compatibility -- **Asset Hub compatibility**: PDD integrates with existing Asset Hub infrastructure including native asset transfers, fee payment mechanisms, and XCM asset handling. No breaking changes to existing Asset Hub functionality. -- **Wallet compatibility**: As a native Asset Hub asset, PDD works with all existing Polkadot ecosystem wallets without requiring wallet updates or custom integration work. +- **Asset Hub compatibility**: pUSD integrates with existing Asset Hub infrastructure including native asset transfers, fee payment mechanisms, and XCM asset handling. No breaking changes to existing Asset Hub functionality. +- **Wallet compatibility**: As a native Asset Hub asset, pUSD works with all existing Polkadot ecosystem wallets without requiring wallet updates or custom integration work. ## Prior Art and References @@ -176,7 +176,7 @@ The implementation follows the Honzon protocol pioneered by Acala for their aUSD - **Financial Fellowship governance model**: How should the Financial Fellowship be structured and selected? What specific powers should it have over risk parameters, and what checks and balances should exist to prevent governance capture or misaligned incentives? - **Oracle infrastructure design**: How exactly should we get price data from other parachains (via XCM or state-proofs)? How do we ensure the implementation is not fragile to runtime upgrades? - **Emergency powers scope**: What conditions should trigger emergency shutdown, and who should have the authority to execute it? How can the system balance responsiveness to crises with protection against governance attacks? -- **Treasury integration**: Should the Treasury automatically mint PDD when making a payout? How should the Treasury manage its CDP positions? +- **Treasury integration**: Should the Treasury automatically mint pUSD when making a payout? How should the Treasury manage its CDP positions? - **Savings policy**: What is the initial Savings Rate, fee share split, cap size, and reserve buffer target? Under what conditions can throttles be enabled, and what notice is required? ## Future Directions and Related Material @@ -190,8 +190,8 @@ Future versions of the system will allow smart contracts to register as liquidat ### Treasury Payment Transition -In a later phase, staking rewards may be paid in PDD instead of DOT inflation, requiring: +In a later phase, staking rewards may be paid in pUSD instead of DOT inflation, requiring: - Economic modeling to determine appropriate reward conversion rates. -- Governance framework for managing the transition from DOT to PDD rewards. -- Technical implementation of PDD-based reward distribution systems. +- Governance framework for managing the transition from DOT to pUSD rewards. +- Technical implementation of pUSD-based reward distribution systems. - Impact assessment on DOT tokenomics and staking participation rates. \ No newline at end of file