A high-level comment to support the discussion, especially related to the timing aspects of it.
Even if a different order of magnitude, BUSD’s case is similar to renFIL’s on Aave v2 Ethereum. A basic asset dynamic is affected (minting), which technically disturbs the fundamentals on the asset in Aave.
Whenever that happens, as proposed & already executed, off-boarding needs to start immediately, but the timing of further steps is also important.
When variable borrow debt (e.g. BUSDs) grows due to its borrow rate dynamics, that means that at some point, that “growth” will need to be covered by somebody, being 1) the borrower itself via repayment or 2) an eventual liquidator to cover the debt of the liquidated user and take the collateral. In both cases, the borrowed asset (BUSD) needs to be acquired before interacting with the protocol, one way or another.
Not having new minting enabled means that all BUSD liquidity to cover the whole debt of Aave needs to come from existing liquidity, both on Ethereum and other venues.
What the previous explanation means is that no matter if collateral or not, an asset with no active minting mechanism should be off-boarded completely as soon as possible, to reduce any type of technical risk of the protocol, in this case, being unable to source from anywhere BUSD.
So it is more optimal to execute the main levers (e.g. RF update + main update of rates) without any delay to “give time to users”, especially when there is no radical measure, like for example can it be lowering Liquidation Threshold in other cases.
That being said, user experience should be taken into account, even if subordinated to the health of the protocol, so:
- RF increase to 99% is clearly required, and as @sakulstra points out, there is no rational reason not to proceed immediately with it. This is a technical situation that requires exercising the levers available on the protocol, completely unrelated to the fee-collection nature of the RF.
- Setting really high slopes is by general rule not recommended, as the dynamics become pretty chaotic from a high-level perspective. Decreasing the optimal point of the rate strategy is acceptable because it is just an abstraction of the rate dynamics, but (risk providers should give a more precise recommendation) increasing effective rates above ~150% total APY (considering base + slope 1 + slope 2) is something that most probably will not really help much and could create important problems for users borrowing BUSD.