Except that in this case, the collateral needs to be actual money. While in real life you can give someone a physical thing, you can't give it in the virtual wo

Except that in this case, the collateral needs to be actual money. While in real life you can give someone a physical thing, you can't give it in the virtual world (and NFTs do not matter here: if I have the NFT title to your house but I can't evict you from it and sell it, it's useless). These DeFi loans are less useful than pawn shops. That's the point they're at right now.