Assuming a YTM of 4.3% (after fees) and OBFR being close to that on average, it seems that the max leveraged position to the borrower would lead to 8.80%. This is good but far from great due to the funding risk.
I would suggest to put the collateral factor at 92% so people can safely leverage up to 90%. Indeed the underlying fluctuation is very limited. It would require an unexpected jump in interest rates of 7% to trigger liquidation. Unlikely.
It is my understanding that most of the volume in borrowing will be done by sophisticated actors. I would argue that the 100% utilization interest rate would be better at OBFR +100bps. Borrowers will quickly unwind when the trade is no longer beneficial especially as the transaction fees are 0% (assuming SHV YTM was somewhat stable).
I would also set the kink to 90%. At the current setup, while OSDG would earn 4.30%, lender would only get around 3%. With 90% it moves to 3.4%
Both the proposal (kink at 90% and max interest rate at OBFR+100bps) are increasing the liquidity risk for lender. But it would also increase their return. This is a new protocol and lender will require some risk premium, the liquidity risk will be, in my view, less a concern.