Why people do it
To access liquidity without disposing of an asset they want to keep. To avoid realising a position at an inconvenient time. To obtain a stablecoin balance for spending or for another protocol while retaining exposure.
All three are legitimate. None of them changes the fact that the position must be monitored.
What it costs
Interest accrues continuously and is added to the debt, so the position deteriorates even if prices do nothing. Over long periods this is the quiet cost that pushes an initially comfortable loan toward its threshold.
Plus gas on every interaction, and the liquidation bonus if the position is ever closed out.
The trap: borrowing to buy more of the collateral
Borrowing stablecoins against an asset and buying more of that asset is leverage. It increases returns if the price rises and accelerates liquidation if it falls, because your collateral and your exposure are now the same asset.
Positions constructed this way liquidate on ordinary drawdowns, not extraordinary ones.
Using it conservatively
Borrow well below the maximum, prefer stablecoin debt against uncorrelated collateral, and keep spare collateral available to top up quickly. Decide in advance at what health factor you will act, because deciding during a fast move is not realistic.
FBT Swap shows live loan positions and health where the protocol exposes it, names the data source, and never holds your collateral — repayment and top-ups are transactions you sign.