Lido DAO Proposal to Temporarily Lower EarnETH Treasury First Loss Protection Threshold to Cover Losses from Kelp Incident

April 29: A new proposal landed on the Lido Research Forum, pushing for a temporary reduction to the EarnETH treasury’s first-loss protection threshold via DAO authorization amid the Kelp incident. Under current rules, Lido Earn’s protection only activates when treasury losses exceed 1% of holdings. But the proposal notes that if the rsETH shortage is resolved through DeFi United, actual losses may dip below that 1% threshold. To ensure EarnETH users get full compensation, the proposal recommends a one-time exception for this incident—allowing the first-loss fund to cover losses under the 1% mark. The current estimated remaining borrowing rate loss ranges from 400 to 600 ETH. The proposal emphasizes this is a one-time arrangement tied to user protection, brand reputation, and business needs, and won’t alter the general 1% rule. Since the rsETH incident is expected to wrap up in 5-10 days (and the standard voting window is 7 days), the proposal is time-sensitive.