Holding collateral worth more than the stablecoin outstanding — the standard design for crypto-backed stablecoins.
Overcollateralization is the practice of backing a stablecoin with collateral worth more than the outstanding supply — typically 130% to 200%. It is standard for crypto-backed stablecoins like DAI: to mint $100 of DAI, a user must lock $150 of ETH into a CDP. The excess collateral is what allows the position to be liquidated safely if the collateral value falls, protecting the peg. Fiat-backed stablecoins are usually only fully collateralized (100%), not overcollateralized.