[bpforster24]

Right now we expect most loans will be fully collateralized by other crypto-assets. So the default deterrence would be that if you don't pay back your loan, you lose your collateral.

We also support unsecured loans (i.e., loans that are not fully collateralized). We consider these pretty experimental and lenders should do a lot of diligence before investing.

For unsecured loans, counterparties can agree to any kind of default deterrence that they want. Could be off-chain legal agreement, could be a reputation scheme, etc.

[aphextron]

What exactly is the use case for a 100% secured loan?

[bpforster24]

Even if you 100% collateralize, you can get 2x leverage. That leverage can be applied to all sorts of use-cases, but we think one of the main ones that will be common today is speculative margin trading (e.g., short selling)

[spookthesunset]

So basically, like all crypto it’s just another layer of speculative trading, fraud and scams all the way down?

Congratulations, I guess...