Partial overcollateralization in stablecoins could indeed spark credit innovation. By maintaining collateral above the stablecoin's value, issuers create a buffer against volatility, enhancing trust and stability. This excess collateral can be leveraged as a reserve to back new credit instruments, enabling lending or yield-generating products without compromising the stablecoin’s peg. Such mechanisms could attract institutional players, fostering novel financial products like tokenized loans or decentralized credit facilities. However, risks like collateral liquidation in market downturns or regulatory scrutiny must be managed to ensure sustainable innovation.