Thanks very much for the proposal, @AaveLabs. Our data science team is continuing to analyze this proposal, but we just published an analysis on the forums on the risks of enabling LP tokens as collateral, more generally. We hope that this helps the community assess the risk/reward tradeoffs.
Forum post here.
I also commented on Llama’s proposal with additional color on the market risk implications, which the community can refer to when assessing Aave Co’s proposal as well.