Lido's proposed Fallback Exits would repay lenders with borrower collateral
- —Fallback Exits cover withdrawal shortfalls with borrower collateral, reducing debt
- —Borrowers nearest the liquidation LTV threshold are affected first
- —Lenders receive transferable wstETH, needing a sale or Lido's withdrawal queue for ETH
- —Eligibility cutoff, valuation, fees and limits remain unspecified; audits pending
Why it matters: The design rewrites exit rules for lending markets: lenders take on staking-token risk, while borrowers face lender-driven position reductions.
Source: CryptoSlate