Aave's proposed $50 million institutional lending plan, which aims to provide BTC and ETH loans, faces a risk of losses even if borrowers do not default. This is because the Aave DAO would initially borrow stablecoins (USDC or USDT) against its own crypto assets (WETH, WBTC, AAVE) to fund these institutional loans, while institutional borrowers would pledge BTC or ETH with a custodian. A decline in crypto prices could weaken both collateral pools, and rising stablecoin borrowing costs could narrow the DAO's interest spread, potentially leading to collateral pressure or increased funding costs for the DAO, independent of the institutional loan's repayment status. The plan involves two separate collateral books and repayment obligations, with indicative borrower pricing at 6%-8% APR against approximately 4.5% funding costs, implying a 1.5-3.5 percentage-point spread for the DAO.