The classification of algorithmic stablecoins within the decentralized finance (DeFi) ecosystem is under debate. Some argue that algorithmic stablecoins, unlike USDC yield products, represent genuine DeFi due to their decentralized nature. A proposed ideal model involves an ETH-backed algorithmic stablecoin, where liquidity is primarily supported by collateralized debt position (CDP) holders. This model allows for counterparty risk to be managed by market makers, enhancing its DeFi credentials. Further, even if algorithmic stablecoins are backed by real-world assets (RWAs), they can still be considered DeFi if they are overcollateralized and diversified. This ensures stability even if a single asset fails, improving risk management for holders. The discussion suggests a shift away from dollar-based units of account towards a more diversified index, contrasting with current practices like using USDC in platforms like Aave.