For example, imagine the minting ratio is 10000 and a user deposits 1wBTC to mint 10000 rcTokens and rrTokens. The user then sells the rcTokens and holds rrTokens. Before expiration, the user prepays 10000 DAI along with 10000 rrTokens and receives the 1 wBTC back. However, still before expiration, the price of wBTC drops to $9000. There is now a risk free mint to deposit 1 wBTC and mint 10000 rcTokens and rrTokens and then default on the repayment. The 10000 rcTokens would then receive the pro-rata share (50%) of both the 10000 DAI already prepaid into the capital pool and the 1 wBTC forfeited. This 5000 DAI + 0.5 wBTC would be worth $9500 for a risk free profit of $500. By eliminating minting below a certain threshold this situation is avoided.
Disclaimer: Oracle is ignored if the collateral does not have an onchain price feed.