Lido’s proposed exits would pay lenders with borrower collateral

Lido Lend, a proposed lending protocol from Lido contributors, could let ETH lenders shrink borrowers’ positions before liquidation if its final rules make healthy loans eligible for collateral withdrawals. Its Fallback Exits design would cover a lender’s withdrawal shortfall with borrower collateral while reducing the affected debt. In the ETH/wstETH example in the October 16 disclosure , lenders supply ETH and borrowers pledge wstETH to borrow it. An exit into that collateral would leave the lender exposed to a staking token before obtaining ETH. Exact borrower eligibility and the token-versus-claim delivery interface remain unsettled.

Source: CryptoSlate