What Is the Primary Risk Associated with Over-Collateralized Decentralized Stablecoins?

The primary risk is the volatility of the underlying crypto collateral. If the value of the collateral drops sharply and rapidly (a "black swan" event) before the system can liquidate the vaults, the stablecoin could become under-collateralized, potentially leading to a de-pegging event.

Smart contract risk and governance attacks are also significant concerns.