You lock your bitcoin. Based on that receive the fiat. Once you pay back your bitcoin will be unlocked. If you don’t pay back you can lost your locked bitcoin. It’s 2/3 multisig between you, counterparty and firefish (mediator).

If the price of bitcoin dumps you are prompted to increase collateral. In the worst case you will keep your fiat and counterparty gets your bitcoin with nice exchange rate 🥲