I'm working with Arduino and hash-based signatures which are signature schemes that use only hash functions. Due to the constraints of an Arduino I was thinking about using SHA1 as the underlying function of my hash-based signature. But I'm not sure if it still makes sense to use SHA1 due to its vulnerabilities. Is there a scenario in which would be acceptable to use SHA1?
No, use SHA256.
If you look at https://bench.cr.yp.to/results-hash.html it seems that SHA256 would probably be the better choice concerning speed as well. Therefore I don't see a good reason to go with SHA-1.