In a major move within the decentralized finance (DeFi) ecosystem, the Arbitrum community has overwhelmingly supported the release of approximately $71 million worth of Ether that had been frozen following a cyberattack on Kelp DAO. On Thursday, a proposal to unlock these funds received the backing of 90.5% of voters—representing 173.9 million ARB tokens—with less than 1% voting against and 9.4% abstaining from the vote.
Collaborative rescue plan
The proposal was jointly developed by several leading DeFi platforms, including Aave Labs, Kelp DAO, LayerZero, EtherFi, and Compound. The initiative requests the release of 30,765 ETH, which had been placed under freeze by Arbitrum’s Security Council on April 21. This action comes after an attacker withdrew about 116,500 restaked Ether (rsETH) from Kelp DAO, at the time valued between $290 million and $293 million.
This vote marks the completion of the first phase of “DeFi United,” a collective recovery project aiming to partially restore affected rsETH reserves. Protocols such as Mantle, EtherFi Foundation, Golem Foundation, Lido DAO, Ethena, LayerZero, Ink Foundation, and Tydro have all joined forces in this initiative. Together, participating organizations have pledged a total of 43,000 ETH—valued at roughly $101 million—to help counteract the damage from the Kelp DAO attack.
Next steps and partial recovery
Looking ahead, a temperature check vote will be held to gauge the sentiment of appointed representatives on the proposal’s next steps. If approved, the final decision will go to a binding governance vote on the Arbitrum network. Once the process concludes, the unfrozen assets will be transferred to a designated Gnosis Safe wallet, which will require three validator signatures from Aave Labs, Kelp DAO, Certora, and EtherFi.
The proposal document emphasized that even a partial replenishment of rsETH reserves, if a full restoration is not possible, could contribute significantly to stabilizing the DeFi market.
Despite the approval, it is noted that there will still be a deficit of around 76,127 rsETH in the reserves, equating to approximately $174.5 million. Officials from Arbitrum and Aave are currently assessing the next phases of recovery and considering a timeline for restoring reserves in full.
Arbitrum DAO aims to diversify with ETH and USDC investment
At the same time, Arbitrum DAO is moving forward with a separate proposal to transfer 6,000 ETH—worth around $14 million—into the DAO treasury portfolio. The initial plan called for only 5,000 ETH, but feedback on the governance forum led to an increase to 6,000 ETH. The proposal also includes adding about $150,000 worth of idle USDC to the portfolio.
According to the Arbitrum governance forum, this strategy is designed to diversify the portfolio while generating additional yield. So far, 99.9% of participants have voted in favor of the measure, casting nearly 185.7 million ARB tokens. The final vote is scheduled to close on Friday.
The proposal estimates that depositing 6,000 ETH could yield 288 ETH, or around $625,000 in extra income, in a year based on the portfolio’s 30-day average annual yield.
This move is regarded as part of DAO’s broader strategy to actively manage treasury assets and build a more sustainable financial model for the community moving forward.
Arbitrum’s evolving ecosystem and market impact
Arbitrum has emerged as a prominent layer-two scaling solution for Ethereum, boosting transaction speed and reducing fees. The platform continues to draw attention with its policies on security, decentralization, and transparency, with recent critical governance votes set to shape the ecosystem’s future direction.
