A joint proposal, set to be voted on later Thursday, aims to unfreeze approximately $71 million in Ethereum that was frozen following the Kelp DAO attack, bringing a cross-protocol recovery effort closer to restoring partial backing for rsETH.
As of publication, over 90.5% of the token votes supported the proposal, representing 173.9 million Arbitrum (ARB) tokens; 9.4%, or 18.1 million tokens, abstained. According to Snapshot data, less than 1%, or 1,700 tokens, voted against the proposal before the voting period was originally set to end at 6:54 PM UTC.
This proposal, jointly initiated by Aave Labs, Kelp DAO, LayerZero, EtherFi, and Compound, aims to unfreeze 30,765 ETH that were frozen by the Arbitrum Security Council on April 21. Several days earlier, an attacker transferred approximately 116,500 re-staked ETH (rsETH) from Kelp DAO, valued at the time between $290 million and $293 million.
This proposal marks the conclusion of the first voting round, bringing the “DeFi United” revival initiative closer to restoring partial backing for rsETH and advancing the motion toward a final on-chain governance proposal. Shortly prior, Aave Labs liquidated the remaining rsETH positions held by the Kelp DAO hacker on Ethereum and Arbitrum, further resolving the incident.
"DeFi United" is a recovery initiative led by the following DeFi protocols: Mantle, EtherFi Foundation, Golem Foundation, Lido DAO, Ethena, LayerZero, Ink Foundation, and Tydro. Together, they have committed a total of 43,000 ETH, valued at approximately $101 million, to mitigate the contagion effects of the Kelp DAO attack.
Next, these protocols will conduct a Snapshot "temperature check" to gauge delegate sentiment before the proposal is formally submitted on-chain as a constitutional Arbitrum Improvement Proposal (AIP) via Tally.
Joint proposal by the Arbitrum Security Council to freeze funds. Source: Snapshot.org
After approval through a binding on-chain governance vote, these funds will be released to the designated recovery address "0xf22" and held in a 3-of-4 Gnosis Safe (SAFE), with signers from Aave Labs, Kelp DAO, Certora, and EtherFi.
However, even if the final governance proposal passes, rsETH still faces a shortfall of approximately 76,127 rsETH, currently valued at around $174.5 million. The proposal argues that even partial restoration of rsETH backing would help stabilize market conditions across the broader DeFi ecosystem.
Cointelegraph has reached out to Arbitrum and Aave for comment on the next steps in the governance process and the proposed timeline for restoring rsETH support.
Arbitrum will propose deploying 6,000 ETH for yield.
Arbitrum DAO will also approve another proposal to transfer 6,000 ETH (currently valued at approximately $14 million) from the DAO treasury to its Treasury Management Portfolio.
Based on feedback from the Arbitrum governance forum, the proposal increases the planned ETH allocation from 5,000 ETH to 6,000 ETH. It also seeks to transfer approximately $150,000 in idle USDC into this portfolio to generate additional yield.
According to Tally’s data, over 99.9% of voting power supported the proposal, representing 185.7 million ARB tokens; 0.1%, or 266,930 ARB, abstained. The voting window is expected to close on Friday at 2:22 PM UTC.
Proposal to transfer 6,000 ETH to the Arbitrum DAO portfolio. Source: alt.gov.arbitrum.foundation.
Based on the current 30-day average annualized yield, allocating 6,000 ETH to the yield strategy is expected to generate an additional 288 ETH over the next year, valued at approximately $6.25 million, assuming an ETH price of $2,200.