I think this is an amazing application we are yet to see. The general model of lending in defi is the type where collaterals are still provided in crypto. I think if we can have a way to arrange the logistics and be able to use physical valuable assets for collateral. Maybe this would have the limitations of location. But impossible is nothing anyway.
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Using the real world or our physical valuable asset for lending either crypto or just fiat collateral is not a good enough business decision , when involving internet and actual distance.
That might get depending on total lending amount.