There is no collateral. Borrowers are fully anonymous (just a wallet address) and there are no direct consequences for defaulting. The wallet is just marked as "defaulting" and so it might be more difficult to borrow again with the same address if lenders check the wallet status first.

Yes, correct, there is no collateral. I think building a version of this designed around collateralized debt would be really interesting too, but this isn't that. It's more meant to be a very early building block here around a fully autonomous agentic financial future