Thanks for your proposal @metalface and your risk analysis @Anjan-ParaFi
The Aave Protocol experiences high borrowing demand with a high appetite for stablecoins. Since FRAX is not fully collateralised by stablecoins, there is a significant risk and so it seems ingenious to start only as a borrowing asset with the risks reflected in the Reserve Factor
I’m surprised to see you have chosen the interest rate strategy of stablecoins with medium to high liquidity such as DAI which has over $2b on Aave
The lower the liquidity the more volatile the utilisation and so the borrow rates. Meaning there is a higher need to protect liquidity to enable depositors to withdraw at anytime
Personally, I believe FRAX could be a good asset to borrow on Aave, but at launch would favor a more aggressive borrowing curve with a variable slope 2 at 100% which has worked well for similar assets such as sUSD and BUSD. As liquidity grows and utilisation stabilises, the parameters could be adjusted
Hope to see a snapshot soon with multiple calibration options for the community to select their favorite