There is no underwriting and no counterparty to assess. You post collateral worth more than you borrow, the contract tracks the ratio through an oracle, and if the buffer thins, anyone may repay part of your debt and take your collateral at a discount via on-chain-liquidation.
Rates float with demand. A high utilisation-rate pushes borrow costs up to attract deposits and discourage borrowing, which also means withdrawals can be temporarily impossible when utilisation approaches 100% since the money is out on loan.
The risks worth naming: contract bugs, oracle failure, bad-debt from illiquid collateral, admin-key-risk where a multisig can change parameters or list a dangerous asset, and correlated crashes in which everyone is liquidated at once. Deposit insurance does not exist here.
Related: collateral-factor, health-factor, utilisation-rate, on-chain-liquidation