> For the complete documentation index, see [llms.txt](https://jpydf.gitbook.io/jpy-defi/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://jpydf.gitbook.io/jpy-defi/introduction/why-jpy-and-decentralized.md).

# Why JPY, Why Decentralized

JPY DeFi is the protocol that issues **JPYdf**, a crypto-asset-backed stablecoin that aims to track the value of the Japanese yen.

## Using JPY as a reference

Most stablecoins used on-chain today reference the US dollar, and on-chain trading, collateral, and settlement are also centered on the dollar. JPYdf aims to provide an option for borrowing and transactions that uses the Japanese yen as its reference, although its market value can deviate from that target.

## A design that does not depend on an issuer

With many stablecoins, an issuer holds the reserves and controls issuance and redemption. In that model, users bear the risks that the failure of a bank or issuer holding the reserves affects the coin's value, that the issuer can freeze addresses, and that they have to trust reserve disclosures.

JPYdf is issued by smart contracts against crypto assets and other collateral deposited on-chain. The Core has no function that lets a single issuer stop or freeze JPYdf, borrowing, or redemption at its discretion.

## Where trust is still required

The degree of decentralization differs by layer, and JPY DeFi as a whole does not operate without trust in third parties.

* The issuers of collateral such as USDC can freeze their tokens.
* External venues where collateral is deployed carry loss and liquidity risks.
* Governance has powers over the proprietary layers that hold and deploy collateral and over the price sources the Core uses ([Governance & Timelock](/jpy-defi/governance/governance-and-timelock.md)).