On-chain lending will split between “collateralized” and “underwritten”.

In collateralized lending, you will deposit crypto collateral and withdraw a loan.

In underwritten, someone will deposit collateral on your behalf and take the risk of your default.

The reason that you’ll want both is that their interest rates are priced differently (with underwritten higher to compensate default risk).

That is, some of your loan will be collateralized and some underwritten. You will choose your capital efficiency by its interest rate.

Some people might opt to be fully underwritten, and this is also the profile of mainstream users.

If you underwrite your mainstream friends, you can “pull” them into crypto and give them some credit to play with.

The underwriting model also works well with social graphs. You can naturally get or request underwriters through your contacts.