Enabling an asset as collateral can be one of the riskiest phases for a new asset coming onto Aave. As such, we strongly recommend listing assets without enabling them as collateral to observe how usage evolves for supplies and borrows and to derisk any mechanism design issues that could pose an outsized risk to Aave. It is great to see that is the approach being taken for LUSD. Once an asset has sufficient time in the market (O(weeks)), we are comfortable enabling them as collateral as part of the biweekly parameter update process, provided there is sufficient liquidity and community buy-in.
We recommend the below initial parameters for LUSD. We recommend setting the reserve factor as the same as other stablecoins on the platform:
Max LTV: 0%
Liquidation threshold: 0%
Liquidation bonus: 0%
Reserve factor: 10%