Lido proposes Kelp-specific EarnETH first-loss exception

What happened

Lido Earn contributors proposed authorizing a one-off use of the existing first-loss mechanism for actual residual Kelp-related losses borne by EarnETH users, even when losses fall below the existing 1% threshold.

What changed

If approved, EarnETH could apply its first-loss backstop below the normally applicable threshold for this incident, but only after accounting for alternative coverage.

What did not change

The proposal does not alter the general threshold, add a treasury allocation, subsidize yield, replace foregone APY, or establish that any payment has occurred.

Confirmed

• The requested authorization is limited to residual Kelp-related losses borne by EarnETH users.
• The proposal describes the exception as one-off and leaves the general threshold unchanged.
• The backstop would apply only to the extent alternative loss coverage is insufficient.
• The proposal commits contributors to publishing a postmortem if approved.

Still open

• The Snapshot outcome and any additional implementation authorization.
• The actual residual loss after external recovery and curator coverage.
• The contributors' attributed estimate of approximately 400–600 ETH.
• The timing of normal operations and withdrawals for affected EarnETH users.
• Whether and how much of the first-loss backstop is ultimately used.

What it means for an advisor

• Review the Lido memo's EarnETH loss-allocation and withdrawal assumptions before treating the proposed exception as effective coverage.
• Monitor the vote, final loss calculation, alternative coverage, postmortem, and any executed payment.
• Do not infer that the proposed backstop makes EarnETH or the underlying Kelp exposure safe or fully recovered.