Decentralized stablecoins are digital currencies designed to maintain a stable value, usually by being tied to traditional assets like the US dollar, gold, or other commodities. What sets them apart from centralized stablecoins is their decentralized structure. While centralized stablecoins like Tether (USDT) are managed by a company that holds the backing assets, decentralized stablecoins use blockchain technology to ensure their value remains stable.

These stablecoins work by having users lock up cryptocurrency as collateral in smart contracts, which then issue stablecoins. If the value of the collateral drops too much, the system will automatically adjust to prevent the stablecoin from losing its peg. This makes Decentralized Stablecoins Development safer from manipulation or failure caused by a single party.