There are defi loans for example. You take an asset like BTC and loan stablecoins against it.

The underlying asset can be rehypothecated, Celsius did this before going bust iirc.

Tether is also the underlying backer of crypto market cap, and has never done an audit of their assets. They've made loans to various crypto market participants.

In theory there are auto liquidation rules etc. In practice humans have not yet managed to create a financial system they can't make asset bubbles with