Lido has been developed as a DAO for a number of reasons, one of them being to address the concept of an insurance fund.

As a DAO, Lido can choose any of the following approaches:

  • Socialise the slashing loss to all users in order to reduce individual impact.

  • Leverage existing risk capital pools to buy slashing cover from, for example, Nexus Mutual or Shield DAO.

  • Maintain its own insurance fund to cover slashing penalties directly.

In the future with the development of insurance markets It will be possible to insure your stETH from slashing or even from a hypothetical failed launch of ETH 2.0.

Questions like these will be proposed and voted on by the DAO, and we are unable to provide a clear answer as to the exact approach that will be taken.

For insights on Lido DAO Governance decisions, visit research.lido.fi.

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