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What is decoupling capacitor? A decoupling capacitor is a capacitor, mainly used to de-couple a part of an electrical network from another. Decoupling: The art and practice of breaking coupling between portions of systems and circuits to ensure proper operation.Bypassing:The practice of adding a low-impedance path to shunt transient energy to ground at the source. Required for proper decoupling.[2] Decoupling is not the process of placing a capacitor adjacent to the IC to supply the transient switching current, rather it is the process of placing an L-C network. It is very important to remember this fact -- we are placing an L-C network between the power and ground, not a capacitor![3] Why do we need decoupling capacitances? Power supply variations can lead to potential functional failure or performance failures Inorder to understand the situation better, figure models power grid and a loading circuit[4]. In this Gg, models the grid conductance , Gd and Cd model for decoupling capacitance , Iload models the time-dependent current waveform of the load 
As per the mentioned formulaes [4], we can come to conclusion to reduce the noise factor, We need to increase decoupling capacitance, so the need for a decoupling capacitor. The power distribution network, has a capacitive behaviour at low frequencies and shows inductive behaviour as we move towards the higher frequency range. The decoupling capacitors, acts as a charge reservoirs , by charging to the supply voltage when the active circuit are idle and supply current when there is a need. Ideally, decoupling capacitors should act as a short-circuit between the power and the ground plane. The decoupling capacitor acts like a short only at frequencies close to its resonant frequency. [6] Why Decoupling capacitors need to be placed near the active circuits? Decoupling capacitances can be modeled as R,L and C . The decoupling capacitor acts like a short across the power and ground planes, only when it is close to its resonant frequencies. The impedance of a decoupling capacitor is similar to RLC circuit. Where, Z = R + jwL + 1/jwC, where, w = 2(pi) f. 
In Reality, the decoupling capacitors are distributed across the chip . Capacitors placed closer to the active circuits will have lower loop inductances associated with them when compared with the capacitors placed farther away. So the resonant frequency , the capacitor shows an inductive behavior and the performance of the capacitor as a charge provider degrades.[6] What are the implications of De-cap? Decap oxide leakage increases References - Timing Aware Decoupling Allocation in Power Distribution Networks by Sanjay Pant, David Blaauw [http://www.aspdac.com/aspdac2007/pdf/archive/8A-2.pdf]
- Cypress Article:Using Decoupling Capacitors [http://hsi.web.cern.ch/HSI/s-link/devices/g-ldc/decouple.pdf]
- Decoupling, by Electromagnetic Compatibility Consulting and Training [http://www.hottconsultants.com/techtips/decoupling.html]
- Optimal Decoupling Capacitor Sizing and Placement for Standard Cell Layout Designs, by Haihua Su, Sachin S. Sapatnekar, Sani R. Nassif [http://www.research.ibm.com/arl/publications/papers/tcad0403.pdf]
- Distributed Active Decoupling Capacitors for On chip supply Noise cancellation in Digital VLSI circuits , by Jie Gu, Ramesh Harjani, Chris Kim
- Design of High Speed Packages and Boards using Embedded Decoupling capacitors , by Prathap K. Muthana
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