Investors can diversify stablecoin exposure to mitigate single-token risks. Instead of relying solely on USDT, spreading holdings across multiple decentralized stablecoins (e.g., DAI, FRAX) reduces dependence on centralized issuers. Each stablecoin has different collateral mechanisms—DAI uses overcollateralized crypto, while FRAX combines collateral and algorithmic adjustments. In a volatile market, this diversification protects against potential depegging events or regulatory actions targeting specific tokens.