Lido DAO has proposed a temporary adjustment to its EarnETH loss protection mechanism amid the ongoing Kelp incident. The proposal suggests lowering the first-loss protection trigger threshold, which currently activates only when losses exceed 1% of the vault's holdings. This adjustment aims to ensure full compensation for users, even if losses fall below the 1% mark, particularly if the rsETH shortage is resolved through DeFi United.
The estimated residual borrowing rate loss ranges between 400 and 600 ETH. This one-time measure is intended to protect users and maintain brand reputation without altering the standard 1% rule. The proposal is time-sensitive, as the rsETH incident is expected to be resolved within 5 to 10 days, while the standard voting period is 7 days.
Lido DAO Proposes Temporary Adjustment to EarnETH Loss Protection
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