I do not understand the procedure for granting a loan. Do you have to provide your personal information? If so then after that you and all your wallets will be in danger. Why do I need to take money from strangers and risk my anonymity? If personal data is not needed, who will protect the borrower?
There is not much to understand, lending in cryptocurrencies works in a way very similar to a pawn shop, when you ask for a loan in a pawn shop you need to bring something valuable that can be sold in the case you default the loan, the object you bring needs to exceed the value of the loan you ask and in the case you want it back you have a limited set of time to pay your loan with the agreed interest.
Lending cryptocurrencies works in exactly the same way, it may seem rudimentary but this way of lending has been around for a long time and it is the most honest way to lend money since you are not taking advantage of those that cannot pay you back like banks do.