In July 2021, the Lido DAO voted to take on self-cover by allocating a proportion of funds - in the form of protocol fees - for cover purposes.
At its core, the fund is a contract that stores stETH and allows the Lido DAO to vote on use-cases and to take control of the funds if and when the Lido DAO decides to apply cover.
The cover fund could be used, as an example, to compensate stakers in the case of slashings (or other risk scenarios outlined here).