Summary

  • Lido said it is moving to launch 'Lido Lend', a DeFi lending market with enhanced security.
  • It said Fallback Exits and a Guardian Security Council would focus on protecting lender assets and blocking hacked funds from entering the platform as collateral.
  • The first lending market will let users borrow WETH against wstETH as collateral, with markets for tokenized real-world assets (RWA) and dollar stablecoins set to be added later.

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Lido, the Ethereum liquid-staking protocol, is moving to launch “Lido Lend,” a decentralized-finance lending market with added security features.

According to a proposal posted on the Lido research forum on November 10, Lido Lend would be built on Morpho Blue and would focus on protecting lenders’ assets rather than borrowers’. The core smart contracts have already been deployed on the Ethereum mainnet, and formal adoption would require an on-chain vote by LidoDAO.

Lido Lend would introduce a “Fallback Exits” feature that allows funds to be withdrawn even when market liquidity is limited. If lendable assets run short, the system would use part of a borrower’s collateral to process lender withdrawals.

The proposal also includes a Guardian Security Council aimed at blocking hacked or illicit funds from being posted as collateral. Guardians would review the source of newly deposited collateral to determine whether it is tied to stolen funds or illegal activity, and could restrict new borrowing by accounts found to be problematic.

Emergency controls would also be put in place to respond to market disruptions. If risks rise, the system could limit new borrowing and collateral use in individual lending markets, or temporarily pause activity in a given market if needed. The structure, however, is designed so the operator cannot directly move or custody user assets.

The first lending market would let users borrow WETH against wstETH as collateral. Lido also plans to later add markets that would allow users to borrow dollar stablecoins against tokenized real-world assets, or RWAs.

Minseung Kang