Lido has outlined an exit plan for its lending product that would use borrower collateral to fund withdrawals. Under the proposal, positions closest to liquidation would be tapped first, with their debt reduced as part of the process.
The plan is aimed at unwinding the lending product, but key details are still missing: which healthy loans would qualify for the treatment, and how the lender would ultimately convert collateral into ETH.
How the collateral tap would work
The mechanism described so far is narrow. Borrowers whose positions are nearest to liquidation would see their collateral used to satisfy withdrawals, and the same action would lower their outstanding debt. That ordering puts the riskiest loans at the front of the queue, though Lido hasn't said how it would define “nearest to liquidation” in practice.
For healthier borrowers, the picture is less clear. The plan leaves eligibility criteria for those loans unspecified, meaning it's not yet known whether they'd be touched at all or under what conditions. That gap matters because healthy positions make up the bulk of any lending book, and how they're handled will determine whether the exit is orderly or disruptive.
Two open questions: eligibility and the ETH route
The lender's route to ETH under the plan is also unspecified. Collateral isn't the same as ETH, and converting one to the other involves choices about timing, venue, and pricing that Lido hasn't detailed. Without that, borrowers and depositors can't fully assess what the exit means for their positions.
Eligibility for healthy loans is the other blank. The facts provided don't say whether those borrowers would be asked to repay, whether their collateral would be left alone, or whether they'd face some other treatment. For now, the plan only addresses the riskiest slice of the book.
What borrowers and depositors can watch
Until Lido publishes the missing criteria, the practical impact is limited to the liquidation-adjacent positions it has described. Borrowers in that group can expect their debt to shrink as collateral is used, but the timing and execution aren't public.
Depositors waiting on withdrawals have the clearest stake: the plan is meant to fund them, but it depends on how much collateral can be tapped and how quickly it can be turned into ETH. Neither figure is available yet.
Lido hasn't set a date for publishing the remaining details. The next concrete step is the release of the eligibility rules for healthy loans and the ETH conversion method — without those, the exit plan remains a partial blueprint.
