I like the idea, but there are some fundamental issues I have with this.
SupposeMr X has 1BTC valued at 20,000$, he borrows 20k based on BTC value, BTC drops to $13,000, why should Mr X continue to pay the negative equity loan? With FIAT regulations and laws ensure repayment or some form of insurance to the lender, even then all lending is risky, that’s in a heavily regulated and enforced system.
I’m concerned with risk mitigation.

This platform surely requires digital assests to remain stable, or the collateral digital asset to always have an upward value?

I read the white paper on the phone, so apologies if I am missing something obvious.