Similar to traditional financial companies, DeFi platforms offer collateralized debt products (e.g. loans/ bonds/ derivatives/ mortgages); however, these products are collateralized with digital currencies instead of other assets. Because decentralized platforms do not rely on third party intermediaries to ensure trust between communicating parties, these platforms often rely on collateral deposited in smart contracts to ensure timely and appropriate payment per terms structured in the contract. While many decentralized platforms offer various collateral types, the majority of collateral locked in these contracts is in the form of ether.

https://tradeblock.com/blog/analyzing-the-potential-impact-defi-has-on-ether-supply-and-demand