Expanding Polkadot’s Tokenized Ecosystem: Governance-Owned BTC and ETH Assets

Ecosystem
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Hello fellow travelers :waving_hand:

With the community’s ongoing discussions around pUSD, a governance- and community-owned tokenized version of USD on Polkadot, I wanted to open up a related conversation about extending this idea to other key assets — namely BTC and ETH.

:compass: Overview

Just like pUSD aims to create a stable, Polkadot-native asset that’s transparently governed by the community, having governance-owned and community-managed versions of BTC and ETH (and more) could unlock a wide range of benefits for the ecosystem.

The long-term vision could even evolve into a governance-owned financial corechain, serving as Polkadot’s native liquidity, lending, and staking hub — fully owned and operated by the community.

:light_bulb: Why Governance-Owned Tokenized BTC and ETH?

1. Boosting DeFi TVL and Adoption

  • BTC and ETH remain the most widely held and recognized crypto assets.

  • Tokenized, native versions of these assets (e.g., pBTC and pETH) could significantly increase on-chain liquidity and attract more users, liquidity providers, and developers to Polkadot’s DeFi ecosystem.

2. Diversified Treasury and Payment Flexibility

  • Governance proposals, bounties, and grants could be paid out in BTC or ETH, depending on the project or contributor preference.

  • This would diversify treasury holdings and improve Polkadot’s appeal to a broader contributor base.

3. Treasury Yield and Passive Income

  • The Treasury could generate passive income by lending, staking, or liquidity pooling these tokenized assets.

  • This creates sustainable revenue streams for ecosystem funding, reducing reliance on DOT emissions or one-off treasury expenditures.

4. Cross-Ecosystem Interoperability

  • Tokenized BTC and ETH would enhance interoperability between Polkadot and other major ecosystems, positioning Polkadot as the most open and connected multichain network.

5. Governance-Owned Financial Infrastructure

  • With multiple governance-owned tokenized assets (pBTC, pETH, pUSD, and potentially others), Polkadot could evolve toward a governance-owned corechain that acts as:

    • a liquidity provider,

    • a lending and borrowing protocol,

    • a staking and yield platform, and

    • a cross-chain liquidity hub for the ecosystem.

  • This would create a self-sustaining, community-managed DeFi foundation, fully aligned with Polkadot’s ethos of decentralization and transparency.

6. Alignment With Parity’s Renewed Focus

  • Given that Parity has signaled it will start developing directly on Polkadot, this initiative could fit naturally into that vision — serving as one of the strategic focuses for ecosystem development in the coming era.

:puzzle_piece: Implementation Pathways

There are multiple potential routes to realize governance-owned tokenized assets on Polkadot:

  • Bridge-based approach – Using existing or new trust-minimized bridges (e.g., Snowbridge, Hyperbridge) to mint governance-controlled wrapped assets.

  • Synthetic model – Issuing governance-backed synthetic BTC/ETH collateralized by DOT, pUSD, or other on-chain assets.

  • Hybrid model – Combining external bridging for liquidity with synthetic issuance for governance control.

Each model offers different trade-offs between decentralization, liquidity, and technical complexity. The community could begin with a minimal viable implementation, then expand through governance experimentation.

:hammer_and_wrench: Governance Structure

To ensure transparency and long-term sustainability:

  • Governance could elect a multisig or fellowship-like committee to oversee liquidity and treasury interactions.

  • Parameters such as minting caps, collateral ratios, and yield strategies could be set through on-chain referenda.

  • A public dashboard could display asset backing, utilization, and performance metrics — ensuring total visibility into the system.

:money_with_wings: Treasury Integration and Sustainability

By integrating pBTC and pETH into treasury operations:

  • Polkadot could deploy staking, lending, or liquidity farming strategies through governance-approved protocols.

  • A percentage of the generated yield could flow back into the Treasury, fund ecosystem development, or bootstrap new DeFi initiatives.

  • Over time, this could evolve into a self-reinforcing economic loop, where governance-owned assets continuously fund Polkadot’s growth.

:coin: Expanding the Tokenized Asset Suite

Beyond BTC, ETH, and USD, governance could explore a broader tokenized asset suite, including:

  • pGOLD (and/or pSILVER) – a tokenized, governance-owned version of gold for stability and diversification.
  • pSTOCKS – synthetic “stonks,” representing exposure to traditional markets via decentralized oracles.
  • pBONDs – governance-issued bonds or fixed-yield instruments that could provide stable, predictable returns for the treasury and participants.

This would form the basis for a multi-asset DeFi economy fully owned by Polkadot governance.

:brain: Risk and Security Considerations

Issuing and managing governance-owned assets introduces new risks:

  • Smart contract vulnerabilities

  • Collateral volatility

  • Liquidity imbalances or oracle dependencies

To mitigate these, early implementations should:

  • Begin with limited supply caps and audited codebases

  • Adopt progressive decentralization in governance oversight

  • Conduct continuous monitoring and community reporting

Acknowledging these risks upfront builds confidence and credibility within the ecosystem.

:handshake: Working Group and Collaboration

To move this concept forward, it might make sense to form a working group or research collective — possibly alongside the pUSD initiative — to explore:

  • Technical architectures and collateral models

  • Governance and treasury integration

  • Risk and audit frameworks

  • Cross-parachain liquidity strategies

Collaboration between Parity, the Fellowship, DeFi parachains, and Treasury representatives could accelerate experimentation and ensure cross-ecosystem alignment from the start.

:globe_showing_europe_africa: A Vision for a Community-Owned Financial Future

Polkadot has always been about building systems that belong to everyone.
Governance-owned tokenized assets could be the foundation for the first truly community-owned financial infrastructure — a self-governing, self-funding, and self-sustaining economy that empowers users, developers, and contributors alike.

This isn’t just about DeFi — it’s about creating a governance-owned economy, where the community collectively manages assets, liquidity, and value flows across the entire network.

:speech_balloon: Personal Note & Open Questions

I’m personally not yet deeply familiar with the governance system — so I’m not entirely sure how to move forward if this discussion gains momentum.
If this thread were received overwhelmingly positively, I’d love to understand how to make a formal “Wish for Change” proposal or any other governance motion that could move this idea toward research and experimentation.

:ringed_planet: Next Steps (If There’s Interest)

  1. Form a small working group aligned with the pUSD team and Treasury members.

  2. Draft a technical concept note exploring collateral, yield, and security models.

  3. Submit a “Wish for Change” proposal or similar governance motion to request research funding.