Until recently, say the last year or so, crypto like BTC & ETH were unproductive assets in your portfolio. Look, you understand that you buy and sell crypto in exchange for goods and services. You understand prices going up and down & speculation right?
Well, now you can take out loans against your crypto and/or loan your crypto out to other people.
Collateralized Loan: imagine a utopia where any loan you give out (as the lender) is backed by guaranteed collateral (avoiding total loss) by the borrower. If the borrower defaults, you get their collateral. Also, imagine being able to take US dollar based stablecoins without interacting with a government-backed bank.