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well, at any rate, they shouldn't!

nexo cant spend collateral

collaterlisation is not important here, only loan repayments

but it depends on what the inflow is from those loans. do you have to pay back in stable coins or can it be any crypto asset?

right. that's what I was getting at with the parallel loans question

decentralised platforms still need centralised actors for practical purposes

it then has to use the yield from your loan to pay it's own back

so nexo is obviously borrowing stable coins in the market, and using them to pay you your loan

they cant just create them like a bank?

nexo have to get those stable coins from somewhere, right?

its the risk which seems minimal which kills you

yes but your loan takes what form? stable coins which nexo have borrowed? and your repayments take what form? stable coins which nexo use to pay back their loans?

sorry @Leo but it has to be done, its robot talk all the way down

remember 2008. the crash that couldn't happen. when everything is "risk free" on paper it becomes systemic in practice. now, suppose that this model became (as in the imagined crypto end state) the "whole market"...

so like parallel loans from other borrowers?

for now, unlikely, but not impossible

you're getting stable coins? which nexo dont issue? where do they get them from?

no I mean literally

an obvious failure case is if selling following margin calls causes the price to fall, eg as with portfolio insurance crash

i mean, what are they giving you?