If the loan isn't repayed, LSTR has the sLEO
They could either HODL it or sell it. Likely HODL it is the best option and simply earn yield from the sLEO and assimilate it to their stack
Without LSTR, we don't have a "fund" to back the new stablecoin with.
LSTR issues LUSD (stablecoin) backed by the LSTR fund. It is primarily backed by the loans via sLEO collateral but the secondary backstop is that LSTR holds a massive fund value and backstops the loans with this as "Credit" as well
This increases user confidence vs. offering it without LSTR
thank you for the clear explaination!