A stablecoin backed by overcollateralized crypto deposits inside a smart contract, with liquidations to protect the peg.
Crypto-backed (or CDP-backed) stablecoins mint against overcollateralized crypto deposits held in a smart contract. To mint $100 of DAI, a user might lock $150 of ETH. If ETH falls and the ratio breaches a threshold, the position gets liquidated to redeem the stablecoin at par. Crypto-backed stablecoins are more decentralized than fiat-backed ones but expose holders to smart-contract risk and collateral-volatility risk. DAI, LUSD, GHO, and crvUSD are all crypto-backed.