Lido Introduces New Lido Lend Mechanism: Allowing Lenders to Withdraw Borrower Collateral When Liquidity Is Insufficient

Odaily reports: Lido on the X platform introduced the Fallback Exits mechanism adopted by its in-development lending product Lido Lend. This mechanism allows lenders to complete full or partial withdrawals by seizing borrower collateral when the borrowed asset lacks sufficient liquidity, providing lenders with an additional exit channel.

According to the introduction, Lido Lend is built on a modified version of Morpho Blue, using isolated lending markets composed of related assets, such as wETH and wstETH, and USD stablecoins and U.S. Treasury RWA. When the Fallback Exits mechanism is triggered, borrowers whose loan-to-value ratio (LTV) is closest to the liquidation threshold (LLTV) will be affected first, and their outstanding debt will be reduced accordingly.

Lido stated that specific technical specifications and market parameters will be announced within the next two weeks, and Lido Lend will be deployed to mainnet after completing the DAO governance process.