We think that allowing Uni V3 as collateral will benefit the liquidity in the Defi ecosystem. Uni V3 has proven itself to be the most efficient AMM. Right now, TVL from big pools (DAI/USDC, WBTC/WETH, USDC/WETH) holds almost $1 Billion, which should increase in the future as the ecosystem develop.
The community will need to discuss more on the risk framework for each market, such as the pool size. In the case of liquidation, normally, the collateral assets will sell off on AMM. This does not decrease the pool size. For LP, we need to unwind the position before selling. Unwinding LPs will decrease the liquidity pool, which means price impact will increase for that market.
We support this idea and want to discuss more on the risks. 