Lido DAO Proposal to Temporarily Lower the EarnETH Treasury First Loss Protection Threshold to Cover Losses Related to the Kelp Incident

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Mars Finance News: Lido Research Forum has launched a new proposal, suggesting that the DAO temporarily lower the trigger threshold for the vault’s first-loss protection for EarnETH in the Kelp incident. Under the current rules, the protection mechanism for Lido Earn only activates when vault losses exceed 1% of the amount of the holdings. However, the proposal notes that if the rsETH shortage is resolved through DeFi United, the actual losses may be below 1%. To ensure that EarnETH users receive full compensation, the proposal recommends a one-time exception during this incident, allowing the first-loss fund to be used to cover losses that fall below the 1% threshold. The proposal estimates that the loss from the current residual borrowing rate is approximately 400 to 600 ETH. The proposal emphasizes that this is a one-time arrangement made for user protection, brand reputation, and business considerations, and does not change the general 1% rule. Since the rsETH incident is expected to be resolved within 5 to 10 days, and the standard voting window is 7 days, the proposal is also time-sensitive.

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