Aave, Kelp, and LayerZero Seek Release of $71 Million Frozen ETH for rsETH Recovery

A coalition led by Aave Labs, alongside Kelp DAO, LayerZero, EtherFi, and Compound, has submitted a Constitutional proposal to the Arbitrum DAO requesting the release of 30,765.67 ETH currently frozen following the April 18 exploit involving Kelp DAO.

The frozen assets, valued at roughly $71 million, were secured by the Arbitrum Security Council on April 21 after tracing the funds to addresses linked to the exploiter. If approved, the funds will be transferred to a 2-of-3 Gnosis Safe managed by Aave, Kelp DAO, and Certora to support the recovery of rsETH’s collateral backing under the DeFi United initiative.

Timeline Concerns Highlight Governance Challenges

The proposed Constitutional AIP follows a strict governance process estimated to take about 49 days from discussion to final execution. This timeline includes forum debates, voting stages, and cross-chain finalization steps. Some delegates have raised concerns that waiting nearly seven weeks could place open positions at risk.

Community members such as Nicksta have urged faster action, while Griff Green recommended initiating a Snapshot vote quickly to confirm community support and avoid unnecessary delays.

DeFi United Contributions Aim to Restore rsETH Stability

The frozen ETH represents the largest single contribution proposed so far to the DeFi United recovery pool. Additional commitments include 25,000 ETH from the Aave DAO, 2,500 stETH from Lido, and 5,000 ETH each from EtherFi and Stani Kulechov. Meanwhile, Mantle has proposed a 30,000 ETH credit facility to help absorb any remaining losses.

The proposal also includes an indemnification clause in which Aave Labs would protect the Arbitrum Foundation, Offchain Labs, and council members from legal claims tied to the frozen funds or their release.

Disclaimer

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