hodlhodl kinda does this. lend bitcoin overcollateralized, get stablecoins. it will autoliquidate to the lender if margin hits or doesn't get paid back. each side holds a key and hh holds a key. if hh dies, there is still a way for the 2 keys to unwind the transaction.
Discussion
I misunderstood nostr:npub1t3ggcd843pnwcu6p4tcsesd02t5jx2aelpvusypu5hk0925nhauqjjl5g4
I was talking about loans denominated in Bitcoin
I don’t think there will be many of those
But Bitcoin used as collateral for other lending? That will definitely continue.