Lido DAO Proposes Temporary Reduction of EarnETH First-Loss Protection Threshold to Cover Kelp Event Losses

Gate News message, April 29 — Lido DAO has published a new proposal on its research forum suggesting that the DAO authorize a temporary reduction in the first-loss protection trigger threshold for the EarnETH vault to cover losses related to the Kelp event. Under current rules, the protection mechanism is only triggered when vault losses exceed 1% of holdings. However, the proposal notes that if the rsETH shortage is resolved through DeFi United, actual losses may fall below the 1% threshold. To ensure full compensation for EarnETH users, the proposal recommends a one-time exception in this event, allowing the first-loss fund to cover losses below the 1% threshold.

The proposal estimates current residual borrowing rate losses at approximately 400 to 600 ETH. It emphasizes that this is a one-time arrangement made for user protection, brand reputation, and commercial considerations, and does not change the universal 1% rule. The proposal also highlights the time-sensitive nature of the matter: the rsETH event is expected to be resolved within 5 to 10 days, while the standard voting window is 7 days.