If you want to obtain a loan onchain, then whatever you post as collateral must be a token existing onchain. Otherwise it wouldn't have any visibility on it, or

If you want to obtain a loan onchain, then whatever you post as collateral must be a token existing onchain. Otherwise it wouldn't have any visibility on it, or actionable mechanisms against default. You may post a stablecoin backed by EUR or USD. Here is one such market to do it: https://app.aave.com/reserve-overview/?underlyingAsset=0xa0b86991c6218b36c1d19d4a2e9eb0ce3606eb48&marketName=proto_mainnet_v3 https://app.aave.com/reserve-overview/?underlyingAsset=0xa0b... Heck, if ownership of other real-world assets was defined onchain, instead of paper, you could post that as collateral. For instance, if the ownership of your house was officially registered onchain, then you could post it as collateral. Because whoever loans you, would know that he would get the official ownership of the asset. Which is for all intents and purposes the same thing that happens when we mortgage our house. Except that with our current systems we involve a lot of lawyers, banks, and notaries, that to a large degree would be dis-intermediated into code. To be noted that, of course, you can refuse to leave the house even if you lose control of its ownerhship, but these happens with both paper ownership and onchain ownership. Both would require the enforcement of private property rights by some authority holding the sanctioned right to forcefully remove you.