Others are already undercutting the FRR, I don't know if manually or using a bot. With that option, I'd be able to also automatically undercut them. It would also be better for people taking loans, as there would be more competition for lending.
You're missing my point. Whatever you set your auto-lend to, others will react to the presence of your swap offer and undercut you if they so choose. That's just the nature of the beast... it's a market, people want their offers filled, so undercutting happens all the time. You set your rate to be "FRR minus 0.1", some other guy will set his to be "FRR minus 0.1001" and a fixed rate offer will pop up just below
that. The only way you're going to be able to avoid being undercut by other offers is by taking an active hand in placing your offers, or running a bot to do so for you.
Source: I am undercutting you
constantly by manually placing fixed-rate offers.