Using your crypto as collateral for any loan is a terrible idea of you ask me. You risk the squeeze amd owing more because of market fluctuations with the addition of interest on top of that risk. I've seen it happen time amd time again where it ses like a great idea them a quick market rise or drop screws up all the plans they had. Save for whatever you want to buy amd just keep.ypur other stack off the loans.
I guess the point of this loan is that it works like future contract, we can use these lending features to do some investment on the side without losing our position and I think that's quite good deal.
AAVE entire business point also similar to this so I guess it works.
just imagine borrowing ETH when the price was high and then returning it when the price dumped, sort like future contract, except we can go around investing somewhere else while also waiting for the price to go down.