Thanks for putting forward this proposal @Ava_Labs
Based on market risk and liquidity considerations, we support enabling USDT as collateral. Regarding the specific parameters, we suggest keeping the current parameters as they are configured on Aave.
However, it’s important to note that the primary concern, as mentioned in the post, is the counterparty risk. Ultimately, the community must determine its stance on this issue and decide whether to enable USDT as collateral outside of Isolation mode. If the community is supportive of this, the discussion should be expanded to enabling USDT across the other Aave deployments too. Additionally, the community can choose to raise the reserve factor for USDT, which could serve as a form of compensation for the increased risk associated with USDT in comparison to USDC and DAI.