yeah, it definitely would be denominated in sats, and the 1% on top is on top of the sats. half of the time in fiat terms the lender is up, the other half, they are up only in sats terms.

the thing that is more sticky probably is licenses and shit for doing this, i'm pretty sure in most places there is some shit you have to do, some bond or similar, that you have to hold with some registry in order to operate a lending business.

also, 1% is not likely to break even, you have to have a higher margin than that. probably you want to vary the rate per contract at any given time based on price movement.

it's a cool idea though, full reserve lending, based on a mostly appreciating asset.

i think the hard part is going to be avoiding legal trouble.