Polkadot has officially launched dotUSD, a stablecoin it promotes as having no issuing company, on October 8, 2026. The rollout, however, is currently backed one-for-one by Tether's USDT, the same type of centralized dollar token that Polkadot's own announcement criticizes.
According to governance proposal referendum 1944, phase one allows users to mint dotUSD at a 1:1 ratio with USDT up to a supply cap. To seed trading, Polkadot's treasury is expected to fund a DOT/dotUSD liquidity pool on Asset Hub. Figures were initially set at $2.5 million in USDT for minting and $2.5 million in DOT, later revised to $1.5 million each for a $3 million total.
The Polkadot Community Foundation submitted the proposal and said it acts only in an administrative capacity, and will not issue, operate, or take custody of dotUSD, DOT, or USDT.
The launch has drawn scrutiny because phase one makes dotUSD a claim on USDT reserves. Polkadot's proposal itself warned that centralized stablecoins can be frozen, blacklisted, and controlled by issuers. Tether has routinely frozen funds, reportedly freezing more than $514 million in USDT across 370 Ethereum and Tron addresses in a 30-day window, in addition to $1.26 billion blacklisted during 2025.
Those freeze powers are being challenged in court. On October 6, payments firm Conduit sued Tether in New York over a $2.76 million USDT freeze, claiming its main operating account has been locked for over a year without explanation. It is the second such case in weeks after Thai businessmen sued over $42.4 million frozen across ten Ethereum addresses. Tether has called that suit baseless and cited its work with more than 340 law enforcement agencies.
Phase two, which is expected to introduce DOT-collateralized vaults, an oracle, a stability pool, liquidations, and a redemption mechanism, has no defined release date. Plans for a DOT-backed stablecoin have been discussed since co-founder Gavin Wood flagged the work at the Web3 Summit in July 2025.
