What Is ‘Over-Collateralization’ in the Context of Stablecoin Minting?

Over-collateralization means that the value of the volatile crypto assets locked up to mint the stablecoin is significantly greater than the value of the stablecoin issued. For example, $150 worth of Ether might be required to mint $100 of the stablecoin.

This buffer protects the stablecoin's peg against sudden drops in the collateral's value, ensuring the stablecoin remains fully backed even during market downturns.