Thanks for advancing this proposal @nicnombre
I am (very) supportive in the form put forward and believe this is overdue. My main feedback is around the LTV level as outlined below.
Fundamentally OHM exists to be a highly capital efficient defi native currency for its holders. I believe this functionality leverages the unique advantages of Olympus relative to other third party borrow / lend platforms.
Re the interest rate: I think a nominal rate of 0.33% or 0.5% is appropriate in the context of the service provided to OHM holders and the risk profile. I believe this is FAR less risky to the protocol than depositing DAI in Maker DSR for 1%. That is because Olympus can always deal with the collateral by taking and removing from the supply. This is what makes the facility unique.
Re gOHM: I still think gOHM is the appropriate collateral because we do not have certainty over how the base staking rate will be resolved in the future (particularly if bonding resumes in a material fashion). It is also beneficial for the protocol to have protection in this regard - i.e. the collateral is not diluted away by the staking rate.
Re gOHM collateral value or loan LTV: I think there is some merit in having a buffer here given we are not 100% stables in the treasury and at the extreme this could effectively be a wind-down of the treasury (i.e. if all holders participated). My proposal is to set the max borrow at 85-90% of backing per gOHM. This creates value for non-participants in the event of default (essentially an inverse bond at 10% premium) and / or it creates an incentive for the borrower to repay their loan and unlock their more valuable collateral.
Most importantly, let's press forward with this with some urgency.