But I don't think you find a competitive loan here. Bitcoiners are still used to ridiculous rates from various scams.

2) I lend out my BTC and get back LESS of them. I end up with LESS BTC at the higher value.

Not if you just use BTC as transfer medium of value as I proposed.

Meaning

This way both partys are protected from voltarity.

The point is that if I am long BTC then I expect to make more money in your example by doing the following:

AND I do not have to worry about a default!