In DeFi lending platforms, stablecoins function as secure collateral for borrowing other assets. Traders can deposit USDC or DAI to mint loans for yield farming or speculative trading while keeping the principal stable. Since stablecoins maintain value during market swings, borrowers avoid liquidation risks compared to using volatile tokens as collateral. This strategy allows investors to earn yield on borrowed assets while safeguarding their initial investment, effectively leveraging stablecoins as a risk-managed entry point into higher-yield opportunities.