[In-Depth Analysis] Lido DAO Emergency Proposal: Utilizing the First Loss Fund to Address Kelp Event Risk Exposure

1. Core Event: Risk Management Emergency Proposal

On April 29, Lido Earn contributors submitted an emergency proposal on the DAO governance forum, requesting to temporarily utilize the community's First Loss Fund to cover potential losses from the Kelp incident. The core of the proposal is to waive the original 1% usage threshold limit to address current liquidity pressures.

2. Loss Scale and Sharing Mechanism

Preliminary estimates suggest that, assuming the DeFi United rescue plan proceeds smoothly, the remaining risk exposure in Lido Earn's leveraged staking/re-staking strategies is approximately 400–600 ETH. The proposal clearly states that losses will be shared between contributors and curators, but it is less feasible for curators alone to cover all losses, hence the need to activate the community fund.

3. Key Restrictions and Legal Risks of the Proposal

• One-time Exception: This authorization is a temporary arrangement, not changing the long-term 1% threshold framework, not involving additional DAO treasury allocations, and not used to subsidize APY or restore revenue sharing.

• Potential Legal Risks: If the incident escalates into legal proceedings, related costs could reach hundreds of thousands of dollars, which must be included in risk contingency plans.

4. Time Pressure and Follow-up Arrangements

• Resolution Window: The rsETH incident needs to be resolved within 5–10 days, but the standard governance voting cycle is 7 days, creating a clear time conflict.

• Future Commitments: After the incident is resolved, the team will publish a comprehensive review report and promote systematic optimization of risk management and operational mechanisms.

5. Significance of the Proposal

This move demonstrates DAO governance's flexibility and sense of responsibility in responding to sudden risks, but also exposes the current DeFi insurance and risk control mechanisms' capacity to withstand extreme situations. The community needs to balance "shared risk" with "fund sustainability." $BTC $ETH $DOGE