DeFi is DOA. Gas fees are insane, "layer 2" is just a diplomatic way of saying "offchain centralization"
It may come as a surprise but there are other chains that support DeFi apps and which do not have high gas fees like Ethereum. For example, Avalanche and Solana.
Collateralized crypto loans are the equivalent of people taking loans out on their equity position so they don’t have to pay cap gains and don’t need to Liquidate. So the use case is already demonstrated, it’s just now applied in a crypto world.