With crypto, one cannot simply short by temporarily minting a new coin. If you borrow a coin from me and sell it on to someone else, there is no way, if you default, for me to claw it back. Someone more-clever may have found a way to mitigate that risk somehow, but I don't immediately see one.
I'm pretty impressed with some of the DeFi projects that are being developed. There have been some growing pains with issues like contract bugs and liquidation events during high volatility, but they seem to be improving.
MakerDAO has a pretty well thought-out economic model that lends out stablecoins to borrowers that provide crypto collateral: https://youtu.be/wW1IEZeWY4k
Seems like a good way to get access to spendable funds to buy something like a car without losing crypto exposure and subjecting yourself to capital gains taxes.
It doesn't work as a way of leveraging your money with a small "down payment" like you'd do with a traditional auto loan or home mortgage.
Almost all crypto lending (at least the defi/smart-contract variety) is collateralized lending. There's still a sort of "counterparty" risk, in that the management has to operate price feeds/risk algos to make sure the collateral stays safely about the loan value.
With crypto, one cannot simply short by temporarily minting a new coin. If you borrow a coin from me and sell it on to someone else, there is no way, if you default, for me to claw it back. Someone more-clever may have found a way to mitigate that risk somehow, but I don't immediately see one.