Proposer: Decent Partners

Date: May 2025

Track: Root (decision deposit will be placed at resolution of #522)

Requested amount: 25k KSM held in Asset Hub treasury

Total exchanged: ~400k dUSD ($16 KSM EMA30)

Summary

We propose a structured approach for the Kusama Treasury to obtain native dUSD issued by Brale on Asset Hub, for the purpose of diversification, enabling expenses to be paid out in a stable asset and to recirculate yield back into the ecosystem.

This proposal is to convert a slightly forgotten 25k KSM in Asset Hub treasury to dUSD via Asset Hub’s asset conversion pallet through a DCA mechanism over the course of five weeks creating ~$400k.

As the main KSM LP in the pool was provided by the Kusama treasury, the community will recoup ~50% of the 0.3% pool fees (note LP shares are currently received by Brale, who will send them on as they accrue).

The proposal also includes making dUSD a Sufficient Asset (as USDC/T are on Polkadot) so that the stablecoin can be used to pay transaction fees and exist on accounts without KSM.

We are bundling the DCA and sufficiency request into a single proposal as both require the Root track and large 3,333 KSM submission deposit.

Further reading:

• Brale announcement
• Kusama twitter coverage.

Background

Stablecoins allow the treasury to diversify risk, reduce volatility for proposals and enable more predictable financing for the network.

Uniquely, Brale’s platform enables partners like Decent to launch branded stablecoins and benefit from a share of yield that can be recirculated as public goods, rather than being extracted and privatised as with Circle/USDC.
Technical approach

The referendum uses Asset Hub’s asset conversion and scheduler pallets to create a simple DCA feature that converts KSM to dUSD stablecoins that are then spendable by the treasury.

A fixed amount of KSM is sold per trade rather than acquiring a fixed amount of dUSD.

DCA schedule parameters

• Total duration: 5 weeks and 6 days
• Total amount: 25,000 KSM
• Trade frequency: One trade every 600 blocks (approx. 60 minutes)
• Trade total: 1000 trades
• Per trade: 25 KSM
• Per day: 600 KSM
• Destination: Kusama treasury account on Asset Hub
• Total fee estimation: 0.15% of total amount (50% of LP fees returning to the community/treasury.)

Fee structure

Stablecoin acquisition is performed natively and without intermediaries on Asset Hub through the KSM:dUSD pool which operates with 0.3% fees to LPs. There are no collator fees.

The treasury provided the initial KSM liquidity (ref #428) with Brale providing dUSD meaning Kusama community/treasury will receive 50% of fees.

With the recoup this leaves a 0.15% fee.

Treasury LP share

Note the original plan was for the KSM and dUSD to be added separately, but Asset Conversion Pallet’s logic needs a single account to add liquidity as noted in ref 480.

The short term solution was for Brale to manage the pool directly and add both KSM and dUSD and to send the LP shares back as they accrue.

A longer term solution is in the works which will enable the addition of single sided liquidity when contracts are live on Kusama Asset Hub, meaning these shares can be received by the treasury directly.

Pool management fee

Owing to the inability to add dUSD and KSM separately Brale took on overall management of the pool.

They charge a fixed $1000 monthly fee for rebalancing the pool.

This is the subject of a separate contract with Decent Partners.

We have settled the fees to date (March/April) by reallocating unused KSM from the KSM:dUSD liquidity proposal.

This reallocation also covered currency loss on ref 471 so we avoided needing to top up from the treasury.

See full transaction list and calculations.

There will be a future proposal by Decent Partners to cover these monthly ongoing costs until we have a solution for adding KSM liquidity directly when contracts are live.

Making dUSD Sufficient

Assets on Kusama can be Sufficient or Non-Sufficient.

By making dUSD sufficient the currency can be used to directly pay fees and execute transactions on Asset Hub and beyond.

To hold a Non-Sufficient asset in a Kusama Asset Hub wallet address, a corresponding Kusama Asset Hub account needs to exist on-chain. This is different from other chains, where a wallet address can hold other tokens by default.

On Kusama Asset Hub, users need to ensure that the receiving wallet address holds at least 0.00000333 KSM, which is the Existential Deposit for establishing a Kusama Asset Hub account, prior to sending additional assets to the address.

Sufficient assets can also establish a Kusama Asset Hub account, such that the Existential Deposit in KSM is not necessary.

Sufficiency for dUSD will improve accessibility and user experience for existing and arriving projects.

dUSD Integrations and Updates

With the treasury funded Brale integration (ref #471) into Kusama Asset Hub, the issuance of the US regulated decent/dUSD stablecoin (asset ID 50000002), the launch of the KSM:dUSD liquidity pool and integration into a number of established and emerging projects like Kreivo, Bloque (ref 499), Kippu (W3F grant recipient) and Kwickbit (Decentralized Futures recipient), Kusama now has native infrastructure for developing a regenerative and incentives aligned on-chain economy.

Alongside this, Brale have just announced their IO product - a new zero fee stablecoin onramp allowing simple, fee-less purchases of dUSD directly on Kusama Asset Hub.

There will soon be a permission-less Asset Hub based stablecoin exchange from the Bloque team to run alongside their VISA debit card issuance platform that will enable proposal beneficiaries to easily receive dUSD from the treasury and off-ramp to USDC and/or bank accounts.

We also expect a Polkadot native integration of Brale's issuance platform to go live in the next couple of months.

Regulatory news

As highlighted by Parity/W3F on the Kusamarian's Regulatory Rewind, the UK has recently announced a regulatory exemption for foreign stablecoin issuers like Brale as part of closer co-operation with the US in regulating the emerging global market for digital assets including a ‘transatlantic sandbox’ creating conditions for broader adoption of the technology.

The clarification around regulation and the US exemption opens the door to dUSD being more easily adopted by developers, companies and users, creating a platform for future innovation.

About Brale, dUSD and Decent Partners

Brale is a US regulated issuer of stablecoins. Unlike Circle (USDC) and Tether (USDT) stablecoins, Brale shares yield on the underlying reserves with community partners in line with adoption.

USD yield is paid to the Decent Partners organisation on Kreivo (note this UI is being superceded by new work) where it creates a treasury derived from dUSD adoption that can be recirculated into the ecosystem rather than be extracted by private entities.

Decent Partners is a UK based company.