Aave Requests Arbitrum DAO to Transfer 30,000 ETH in Frozen Kelp Hacker Funds to ‘DeFi United’

Five major protocols, including Aave Labs, KelpDAO, LayerZero, Etherfi, and Compound, have officially proposed to Arbitrum DAO the transfer of 30,765 frozen ETH to the ‘DeFi United’ recovery fund. These funds are assets frozen by the Arbitrum Security Council on April 21, 2026, in connection with the Kelp DAO hack that occurred on April 18, 2026.

The proposal is a cross-protocol collaboration aimed at reducing the rsETH collateral deficit and restoring trust in the DeFi ecosystem, and is seen as an unusual attempt to convert hacked funds directly into a recovery fund. As of April 27, 2026, the proposal is being actively discussed on the Arbitrum governance forum.

The funds are currently frozen by the Arbitrum Security Council and held at a specific address. Aave is requesting the transfer of these assets to a 2-of-3 Gnosis Safe multisig wallet (0xf228...C15e) managed by signers from Aave, KelpDAO, and Certora.

This asset transfer will be an important case study showing how decentralized governance can respond quickly in crisis situations, going beyond simple recovery.

On April 18, 2026, Kelp DAO lost approximately 116,500 rsETH, valued at $292 million, due to an attack exploiting a LayerZero bridge vulnerability. This incident caused the collateral value of rsETH to plummet and triggered a severe chain reaction, including the evaporation of approximately $14 billion in Total Value Locked (TVL) across the DeFi market.

Composition and Contribution Status of the DeFi United Recovery Fund

The DeFi United recovery fund is currently reported to have secured over 100,360 ETH through contributions from various protocols. This is considered a significant step toward covering the total deficit caused by the Kelp DAO hack, and the speed of recovery is expected to be determined by the results of the Arbitrum DAO vote.

• Aave Founder: Promised a donation of 5,000 ETH
• Mantle DAO: Proposed a strategic loan of up to 30,000 ETH (MIP-34)
• Lido DAO: Proposed a contribution of 2,500 stETH (approx. $5.7 million) to cover the rsETH deficit
• Frax Protocol: Expressed intent to join the bailout momentum and provide support

The 30,000 ETH support proposed by the Mantle community is structured as a strategic loan rather than a simple donation. According to the proposal, this loan will carry an interest rate of the Lido staking yield plus a 1% premium, with a maximum maturity of 36 months.

This fund transfer proposal is expected to set a precedent for the exercise of authority by the Arbitrum Security Council. Analysts suggest that the mechanism by which the Security Council, which uses a 9-of-12 signature scheme, freezes hacker funds and transfers them directly to a recovery fund could serve as a model for cooperation between DeFi protocols in future security incidents.

According to a report by Chainalysis, the attack was identified as a sophisticated strike targeting off-chain infrastructure rather than a flaw in the smart contracts themselves. The attacker seized control of internal RPC nodes and launched Distributed Denial of Service (DDoS) attacks on external nodes to inject false data.

An on-chain vote by Arbitrum DAO is expected to begin within the next few days, and Mantle's loan proposal is also nearing the final approval stage. Investors should closely monitor the progress of each governance forum and the actual inflow of funds into the DeFi United wallet.