Lido Earn has added a new source of capital to absorb losses in its ETH and stablecoin vaults before depositors bear them.
From November 5, Firelight sits ahead of the Lido DAO’s existing protection for EarnETH and EarnUSD. These vaults put deposits into curated DeFi strategies. If an eligible loss is approved, Firelight pays first, within the limits agreed for that 30-day period. Remaining losses can then be absorbed by burning the DAO’s own shares in the affected vault.
That second step uses a different rule: once a vault loss of at least 1% of its total value is confirmed, the DAO’s Growth Committee can burn up to all of the DAO-held shares. Those shares belong to the DAO, not to other depositors.
For a depositor, both layers operate at the vault level. Lido says there is no individual compensation request to file. Firelight’s protection follows specified markets, however: moving a vault position into a new market mid-period does not extend cover until a later period includes it.
The new layer covers defined protocol failures, not ordinary price declines or liquidations at accurate prices. Its payout also depends on available capital at settlement. Neither layer guarantees that depositors will avoid losses.
Sources: Lido’s November 5, 2026 announcement and Firelight’s cover scope, checked November 7.
https://blog.lido.fi/lido-earn-introducing-two-layers-of-loss-protection/
https://docs.firelight.finance/resources/cover-scope
#Lido #DeFi
From November 5, Firelight sits ahead of the Lido DAO’s existing protection for EarnETH and EarnUSD. These vaults put deposits into curated DeFi strategies. If an eligible loss is approved, Firelight pays first, within the limits agreed for that 30-day period. Remaining losses can then be absorbed by burning the DAO’s own shares in the affected vault.
That second step uses a different rule: once a vault loss of at least 1% of its total value is confirmed, the DAO’s Growth Committee can burn up to all of the DAO-held shares. Those shares belong to the DAO, not to other depositors.
For a depositor, both layers operate at the vault level. Lido says there is no individual compensation request to file. Firelight’s protection follows specified markets, however: moving a vault position into a new market mid-period does not extend cover until a later period includes it.
The new layer covers defined protocol failures, not ordinary price declines or liquidations at accurate prices. Its payout also depends on available capital at settlement. Neither layer guarantees that depositors will avoid losses.
Sources: Lido’s November 5, 2026 announcement and Firelight’s cover scope, checked November 7.
https://blog.lido.fi/lido-earn-introducing-two-layers-of-loss-protection/
https://docs.firelight.finance/resources/cover-scope
#Lido #DeFi
