There's the rub. If BTC drops far enough, the custodian gets to keep it all.

Sure, a lot of Bitcoiners think BTC will soon shoot to the moon (not unlike home-owners). But the price of Bitcoin will dip further. Unemployment across the globe will start rising soon. And people will be forced to sell all their cryptocurrency stacks to pay for food.

When the value of your collateral gets cut in half because half the other holders are selling just to survive, liquidation is guaranteed.