I like the concept of this proposal. Could definitely get a lot of traction going for GHO liquidity via recursive borrowing / providing.
I also provided a solution here using Gamma Strategies. It’s essentially the same concept, except it makes it easier on the infrastructure by using an ERC-20 wrapper around the position. It may also be something that can be used in Aave v3 emode. I also added details regarding risk, audits, and parameters.
Here’s the ARC regarding our proposal. Would love to get the community’s feedback!