When defining an inductive type, there is a famous "positivity" restriction on the constructor types. For example, an inductive type $\mathsf D$ has constructor $\mathsf c : F(\mathsf D) \to \mathsf D$, where $F(\mathsf D)$ is the type of the constructor argument, and it can contain $\mathsf D$ itself. Then the positivity restriction basically states that the proof assistant needs to see that $F$ is a functor $\mathsf{Type} \to \mathsf{Type}$(1). This is crucial because otherwise the induction principle wouldn't make sense: $$\forall (P : \mathsf D \to \mathsf{Prop}).\left(\forall (\vec x : F(\mathsf D)). \mathtt{fmap}_{F} P \, (\vec x) \to P(\mathsf c\, \vec x)\right) \to \forall x. P(x)$$ where $\mathtt{fmap}_F$ is the map on the morphisms associated with the functor $F$. The proof checker, based on the consideration above, implements some syntactic criteria to ensure functorality, which become known as positivity. On the other hand, the "strictly positive" criterion, as I view it, is added to avoid size issues similar to that of set theory.
This has led me to wonder if such a criterion can be relaxed on propositions. In languages having definitionally irrelevant (or related weaker notions of) propositions, the propositions can be roughly viewed as a subsingleton, i.e. a subset of the singleton. This avoids all the size issues. Also, the functorality condition degenerates because of the irrelevance. So perhaps for inductive propositions, we can allow $F : \mathsf{Prop} \to \mathsf{Prop}$ to simply be monotonic. So if the proof checker can deduce (from some syntactic criteria, or by a user supplied proof) that $F(p) \to F(q)$ whenever $p \to q$, then it should allow this inductive definition. In proof assistants embracing classical logic (at least in $\mathsf{Prop}$), this can be much more powerful. The proof checker might just run a small SAT solver to see if the definition is monotonic.
The question is: does this leads to anything interesting (including possible paradoxes when combined with other features in the type theory)? Pointers to existing literature are also welcome.
(1) : Let's ignore universe levels for now. $\mathsf{Type, Prop}$ are just suggestive notations.