Loans are overcollateralized, so you need to put in the same or more amount of capital that you're loaning out. That may not seem useful at first, but it allows you to have exposure to multiple assets. For example, you may want to use ETH temporarily, but you only have BTC. But you want to keep your BTC investment for the long term. So you're putting up BTC to borrow ETH. You keep your exposure to BTC, but you have liquid ETH.
It's the same concept as putting up your house as collateral. You don't want to sell your house just because you need some liquid cash temporarily.
It's the same concept as putting up your house as collateral. You don't want to sell your house just because you need some liquid cash temporarily.