Aave doesn’t allow any coin with the liquidity of bluna to be used as a collateral so this point seems very disingenuous. If anchor used Luna as the collateral, then a similar premium would be completely appropriate.
Yup.
We should see people taking advantage of some favorable LUNA->bLUNA exchange rates, but your point stands, the size of the liquidity is small relative to the amount that could be liquidated in a crashening v2. We were seeing the market unwilling to go from LUNA->bLUNA with 20-25% gains during some of the ugliest parts of the crashening. How ugly will it look with LUNA->bLUNA rates sub-15% during a future crash?
This is a misstep to reduce the max_premium_rate to 15% even temporarily.
The liquidity for bLuna-Luna LP is not the complete extent of the liquidity for the collateral.
You can hedge the 21 days of bLuna exposure using shorts on other exchanges to hold a neutral position. The only difference between your comparison with Aave tokens is 21 days of cost of capital that needs to be added to the bLuna liquidation.
Do Kwon 
, [Jun 18, 2021 3:20:54 PM]:
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We are reducing premiums by having liquidators bid on premium instead of fixing the rate at 30% - we expect premiums to form around 3-10% at market conditions. LTV also going up from 50 to 60%.
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The only reason we reduced our liquidity for bLuna to Luna is because the yield on that pool was insane just from fees without us having to participate - bc of liquidations the yield from fees was/is > 1000% - this is something we will be bringing to people’s attention as Terraswap launches a better dashboard
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I hate to say it, but I think there has to be some small real asset included for crisis situations. Dollars, gold or w, silver out a basket of currencies. No more than 10% should provide a hard floor to bounce off.
So that would eliminate liquidations where 50% or more of the collateral is sold as in my case?