Now DeFi operates on the principle: "Give me your iPhone as collateral so I can lend you money for a case for this very iPhone." This is safe for the protocol but absolutely foolish for capital. We lock 150% liquidity to obtain 100%. This is not finance; it's a closed sandbox for those who already have money.
If you look at it honestly, it all boils down to anonymity. The protocol does not know who you are — an honest whale or a scammer with a new wallet. It is easier for it to demand excess collateral than to take risks.
But with SIGN attestations, the rules of the game change. Instead of freezing extra thousands of dollars, you pull up your "digital reputation." This can be an on-chain history of your returns on other platforms or even off-chain proofs of income verified by ZK proofs.
In practice, this looks like the only way to mass adoption: you prove your creditworthiness without disclosing your tax return or name. We simply replace "dead capital" in collateral with "live reputation." If DeFi does not learn to trust attestations, it will remain a game for the rich, where capital is simply transferred from one pocket to another.