Okay, eventually it must...depending on the form. In it's current implementation being sold, it won't work. Lending to generate income relies on a mature legal system to back up contractual demands. Crypto itself (an algorithm) cannot guarantee repayment of loans.

"Exchanges" try to bridge this gap and counterparty risk isn't properly priced in. If anything, the high interest payments aren't high enough to represent risk.

Algorithms that can control their own energy usage and energy price can leak out into the real world.