If ETH falls in value, he loses money, resulting in a negative PNL. PNL is added to the margin, so in our example, the margin will start to go below 100 USDC, decreasing the collateral ratio to 25%. If the trader closes this position, he would instruct the contract to swap the current ETH holding back to USDC, repay the loan with interests, and have the remaining PnL back in his wallet.