Lido Finance Updates on KelpDAO Attack Incident Handling Progress
Lido DAO voted on April 29 to donate 2,500 stETH to the DeFi United relief program, which was transferred last week for rsETH incident relief.
On May 6, Aave fully liquidated the attacker’s rsETH positions on Ethereum and Arbitrum as planned, and the liquidated collateral has been entrusted to the Recovery Guardian, with no other users affected.
On May 7, the Lido Snapshot vote reached quorum, officially approving the EarnETH first loss protection mechanism: providing full coverage when the loss rate is below 1%, with all losses for EarnETH users to be borne by the Lido Earn mechanism.
Operations of the EarnETH treasury will resume immediately after the Kelp protocol is unpaused, with a brief waiting period for user funds to be unfrozen, during which the EarnETH and EarnUSD treasuries will continue to generate returns.
Source: Public Information
ABAB AI Insight
Lido, as the largest liquid staking protocol in DeFi, has continued its tradition of accountability with a swift response to the KelpDAO rsETH attack incident. Previously, during the stETH depegging event in 2022, it stabilized market confidence through similar community voting and compensation mechanisms. The donation of 2,500 stETH and the first loss protection mechanism demonstrate Lido's high execution capability in maintaining ecological trust.
In terms of capital pathways, Lido directly uses protocol revenue and stETH reserves for relief and protection mechanisms, reducing user panic by fully covering EarnETH user losses (loss rate <1%). Meanwhile, Aave liquidated the attacker’s positions and entrusted the collateral to the Recovery Guardian to prevent systemic risk spread, aiming to quickly restore EarnETH treasury operations and maintain TVL stability.
Similar to MakerDAO's emergency governance vote after a black swan event and Curve's compensation plan after the 2023 attack, Lido is currently transitioning from pure product competition to a mature governance model characterized by "safety nets + accountability" among DeFi blue-chip protocols.
Essentially, this is about capital concentration: Lido uses community voting and the first loss protection mechanism to concentrate protocol reserve capital for ecological relief and user protection, restructuring resources from dispersed risk exposure into a systemic safety buffer. Mechanically, it rebuilds market trust through transparent governance and rapid execution, reducing the systemic impact of attack incidents on the entire DeFi liquid staking sector.
ABAB News · Cognitive Law
A true blue-chip protocol does not avoid mistakes but dares to back them up with real capital. First loss protection is not a cost but a strategic investment in long-term TVL and user trust. When top protocols actively take on ecological losses, DeFi transitions from a "decentralized experiment" to "trusted financial infrastructure."