I'll acknowledge that there are probably legitimate reasons why someone would put up $1500 worth of Bitcoin, as collateral, to take out a $1000 loan of ethereum.
The concept never really made perfect sense to me, but I'll acknowledge there could be situations where you'd want to do that (ideally with a decentralized exchange).
However, it seems like the most popular use of the concept of "crypto lending", by far, was to justify what were, more or less, ponzi schemes like Voyager, Celsius, etc.
In the past, if a ponzi scheme promised you guaranteed 10%-20% returns, it would raise a huge red flag. How could such a thing be possible?
Bitconnect claimed to be able to deliver huge returns via its proprietary "super sophisticated trading bot!" To most people, that sounded like obvious bs. Anyone with a brain avoided Bitconnect.
However, with the advent of "crypto lending", groups like Voyager and Celsius could now claim to deliver 10%+ returns via "collecting interest off of loans, just like a bank!!" Sounds almost legitimate.
People were happy to believe that "traditional banks" were making insane 25%-50% returns from loaning out the money in your savings account, despite only giving you 0.1% interest, because "banks are just greedy like that!"
We now know that the only way Voyager and Celsius were able to offer those insane returns was by making even more insane bets, like buying DickButt NFTs and investing in obvious ponzi schemes that were offering even more insane returns (like Anchor Protocol).
So my point is that if you had always been wondering who all of these people were who were putting up huge collateral to borrow crypto, and then paying huge interest rate on top of that, you now have your answer: nobody.
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