Lido DAO proposes to temporarily lower the initial loss protection threshold of the EarnETH treasury to cover losses related to the Kelp incident

Golden Finance reports that on April 29th, the Lido Research Forum launched a new proposal recommending that the DAO authorize a temporary reduction of the trigger threshold for the EarnETH vault’s first-loss protection during the Kelp incident. According to current rules, the protection mechanism for Lido Earn only activates when vault losses exceed 1% of the holdings. However, the proposal points out that if the rsETH shortage is resolved through DeFi United, the actual loss may be less than 1%.
To ensure that EarnETH users receive full compensation, the proposal suggests a one-time exception for this incident, allowing the use of the first-loss fund to cover losses below the 1% threshold. The current residual borrowing rate loss is estimated to be approximately 400 to 600 ETH.
The proposal emphasizes that this is a one-time arrangement 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.