1. Person wants to borrow a stable asset (Dai)
2. Person can lock up a different asset (ETH) in order to borrow Dai (Secured loan)
3. For borrowing Dai, person pays money to lender (Stability fee or interest rate)
The reasons for borrowing Dai are many. Trading, tax reasons, flight to stability, etc.
As borrowing demand for Dai goes up, the interest rate paid to lenders goes up.
As better credit systems come online some day, the collateral requirement can move down from 150%.
Another thing people really want in a financial system is insurance. We are staring to see legit options like @NexusMutual pop up for this. It's a vital component.
In the US, your bank account is insured up to $250,000.