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

BlockBeats reported that on April 29, a new proposal was published on the Lido Research Forum, suggesting that the DAO be authorized to temporarily lower the first-loss protection trigger threshold for the EarnETH vault in light of the Kelp incident. According to current rules, Lido Earn’s protection mechanism is only triggered if the vault’s losses exceed 1% of its holdings. However, the proposal points out that if the rsETH shortage is resolved through DeFi United, the actual loss could be less than 1%.

To ensure EarnETH users receive full compensation, the proposal suggests a one-time exception for this event, allowing the use of the first-loss fund to cover losses below the 1% threshold. The estimated remaining borrowing interest loss is around 400 to 600 ETH.

The proposal emphasizes that this is a one-off 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 considered time-sensitive.