Arbitrum DAO to Decide on Releasing 30,766 ETH in Kelp DAO Hacked Assets... 'DeFi United' Recovery Plan Gains Momentum

On April 30, 2026, Arbitrum DAO initiated a significant constitutional vote to release 30,766 ETH (worth approximately $71 million) frozen by the network's Security Council. This measure is intended to handle assets frozen after the large-scale exploit of Kelp DAO on April 18 and is expected to be a key test of decentralized governance. The community will decide whether to transfer these assets to 'DeFi United,' a coalition of major protocols, to restore liquidity and provide relief to victims.

This vote is being evaluated as a crucial case proving the security and governance capabilities of the Arbitrum ecosystem. To resolve the liquidity crisis surrounding Kelp DAO's liquid staking token, rsETH, major DeFi protocols such as Aave and Compound have formed a coalition to propose a recovery plan. The release of assets by Arbitrum DAO is a core factor that will determine the success or failure of this plan.

The vote, which is actively ongoing as of May 1, 2026, specifically identifies the technical destination of the frozen assets. If the proposal is approved, the full 30,765.67 ETH will be transferred to a 2-of-3 Gnosis Safe wallet managed by representatives of the recovery coalition, including Aave Labs. The signers of the wallet consist of trusted representatives from the recovery coalition to ensure transparent execution of the funds.

This incident occurred through LayerZero message forgery, causing the largest trust-based liquidity contraction in Aave's operational history.

The Kelp DAO attack began on April 18, 2026, when 116,500 rsETH was stolen through forged LayerZero messages. The stolen rsETH amounted to approximately 18% of the total circulating supply of the token at the time, leading to an immediate liquidity crisis. The attacker used the stolen assets as collateral on various platforms to convert them into other cryptocurrencies, causing significant damage to lending protocols in the process.

Arbitrum Security Council's Emergency Response and Asset Freeze

Immediately after the incident, on the night of April 21, 2026, the Arbitrum Security Council quickly froze 30,766 ETH located in addresses linked to the attacker. These assets have been moved to an intermediary wallet that cannot be accessed without governance action. The Arbitrum One sequencer successfully blocked further asset outflows by blacklisting four wallet addresses controlled by the attacker, which is cited as a positive example of centralized security intervention in a Layer 2 network.

• April 18, 2026: Kelp DAO exploit occurs and 116,500 rsETH is leaked
• April 21, 2026: Arbitrum Security Council freezes 30,766 ETH
• April 28, 2026: Compound DAO joins the recovery coalition and proposes funding support
• April 30, 2026: Arbitrum DAO initiates constitutional vote to release frozen assets

The DeFi United coalition includes 14 major protocols, led by Aave Labs and including Compound, Consensys, and LayerZero. Their primary goal is to restore the collateral value of rsETH and provide compensation to users who suffered losses during the liquidity crisis. Consensys has already pledged 30,000 ETH in support, and Compound has also contributed to the recovery by proposing a contribution of up to 3,000 ETH.

This exploit had a significant impact on the overall DeFi ecosystem. Notably, the available liquidity in Aave V3 Ethereum Core plummeted by approximately 41.1%, from $9.77 billion to $5.75 billion, within 29 hours of the incident. The release of 30,766 ETH is expected to alleviate market pressure by providing liquidity to the rsETH ecosystem, but caution is still needed regarding volatility risks associated with large-scale asset movements.

Future Governance Schedule and Outlook

The Arbitrum DAO vote is scheduled to close in early May, and if approved, follow-up actions by the Gnosis Safe signers will be implemented immediately. Currently, other major agendas, such as a proposal to transfer 6,000 ETH to the treasury management portfolio, are being discussed simultaneously in Arbitrum governance, putting the DAO's asset management capabilities to the test in various ways. If there is overwhelming support from the community, the frozen assets are expected to be quickly delivered to the recovery coalition.

The resolution process of this incident will serve as an important precedent for establishing a cooperation model between Layer 2 networks and DeFi protocols in the event of similar security incidents in the future. The process of freezing and then releasing tens of millions of dollars worth of assets in a decentralized manner serves as an indicator of the maturity of blockchain governance. Arbitrum DAO's decision is expected to have a significant impact on setting the boundaries between DeFi security protocols and governance intervention in the future.