Aave, Kelp, LayerZero Seek Arbitrum DAO Approval to Release $71M Frozen ETH for rsETH Recovery

Gate News message, April 26 — Aave Labs, Kelp DAO, LayerZero, EtherFi, and Compound filed a Constitutional AIP on the Arbitrum forum Saturday morning requesting the network’s DAO release approximately $71 million in frozen ETH to support rsETH recovery efforts. The proposal seeks to unlock 30,765.67 ETH that the Arbitrum Security Council froze and seized on April 21 after tracing it to addresses controlled by the exploiter behind last week’s $292 million Kelp DAO exploit.

Under the proposal, the funds would be transferred to a 2-of-3 Gnosis Safe co-signed by Aave, Kelp DAO, and Certora, designated solely to receive recovered ETH and restore rsETH’s economic backing. The proposal also reiterates the exploiter’s position on Aave: 89,567 rsETH supplied as collateral against 82,650 WETH and 821 wstETH borrowed across Aave’s Ethereum Core and Arbitrum V3 markets. Aave Labs committed to indemnify the Arbitrum Foundation, Offchain Labs, and Security Council members from any claims arising from the freeze or release, with no cap or deductible.

The Constitutional AIP process carries an estimated 49-day timeline, drawing immediate pushback from community delegates and Arbitrum Security Council members who called for expedited voting to avoid unnecessary delays. Griff Green, a Security Council member, flagged critical open questions including expected outcomes for Arbitrum Aave users, treatment of pre-exploit rsETH holders, and loss socialization in partial recovery scenarios. The 30,766 ETH represents the single largest contribution to DeFi United, the cross-protocol relief effort. Other pledges include Aave’s 25,000 ETH DAO commitment, Lido’s 2,500 stETH, 5,000 ETH each from EtherFi and Aave founder Stani Kulechov, and Mantle’s proposed 30,000 ETH credit facility.