Sky protocol itself is decentralized, but it's not possible to use purely decentralized collateral to back a scalable USD-pegged stablecoin - assets like ETH may be used to some degree but they don't have elastic supply and still rely on oracles that are ultimately centralized. What's important is that the risk parameters and governance around these things are decentralized and cannot be modified instantly or through backdoors - so USDS is able to provide the risk adjusted return of the underlying asset in a highly liquid form, while adding minimal additional points of failure to the stack. The biggest issue with the large concentration of USDC is that it doesn't provide an optimized risk adjusted return, and this will soon change with upcoming Stars focusing on other types of allocation strategies.