I never understood how would anyone use an altcoin for collateral, i mean if you want 1 btc loan but you have like 100 ltc, why not sell the ltc yourself instead of asking for the loan?
As if you belive that your altcoin will rise in price but you need the btc funds for something, then you borrow the summ in bitcoins and give altcoin in that value as collateral and after you repay it, the borrower will give them back to you.
It's simpler and faster as physical collaterall.