Aave Proposes Moving 30K ETH to DeFi United Fund After Kelp DAO Exploit

Aave Labs has proposed that the DAO governing Arbitrum release 30,765 Ether, valued at roughly $73.5 million, that was frozen following the major Kelp DAO exploit. The funds were locked last week by the Arbitrum Security Council after the attack drained about $293 million from the protocol.

The proposal suggests redirecting the Ether to “DeFi United,” a recovery fund designed to restore the value backing of the rsETH token and compensate affected holders. The plan has backing from several impacted protocols, including LayerZero, Ether.fi and Compound.

DeFi United Contributions and Recovery Timeline

Early funding for DeFi United has already surpassed $21 million, with contributions from industry participants including Stani Kulechov and organizations such as Golem Foundation and BGD Labs. Additional commitments totaling about $215 million have been signaled by Mantle, Lido and others, pending governance approvals.

Aave reported that the exploit triggered nearly $12 billion in total value locked losses within a week, creating over $190 million in bad debt after stolen rsETH was used as collateral. The proposed recovery plan is expected to take approximately 49 days, with funds held in a recovery address secured jointly by Aave, Kelp DAO and the security firm Certora.

Disclaimer

This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.