Arbitrum Moves to Unfreeze $71M in ETH via DAO Vote to Shore Up DeFi After Kelp DAO Exploit

Arbitrum governance has advanced a proposal to release 30,765 ETH—roughly $71 million—to help stabilize liquidity and support DeFi protocols affected by disruptions tied to Kelp DAO. The ETH was frozen on April 21 by Arbitrum's Security Council and is now set to proceed to a DAO vote, with the release framed as part of a post-incident recovery effort following the April 18 exploit. The governance plan, outlined in accompanying documents, targets 30,765 ETH held at a designated address. It was coauthored by Aave Labs, Kelp DAO, LayerZero, EtherFi, and Compound, and stipulates that funds will move only after governance approval. Early voting signals show unanimous support from participating tokens, representing more than 34 million ARB. If approved, the ETH would be transferred to a recovery wallet protected by a 3-of-4 Gnosis Safe. The proposed signers are Aave Labs, Kelp DAO, Certora, and EtherFi. The process also includes a Snapshot temperature check ahead of final onchain submission through Tally, adding an additional layer of oversight before execution. The proposal addresses only a portion of the broader liquidity mismatch created by the April 18 incident. According to the documents, the exploit resulted in 116,500 restaked ETH being released without a corresponding burn, creating a gap between issued rsETH and the collateral backing it. Current figures show about 152,577 rsETH issued against roughly 40,373 held, implying a shortfall of around 76,127 rsETH—valued near $174.5 million. The 30,765 ETH release would cover part of that deficit, with the recovery effort aimed at easing near-term liquidity pressure rather than fully closing the gap. Additional support has been pledged across the ecosystem. Mantle, EtherFi Foundation, Golem Foundation, Lido DAO, Ethena, LayerZero, Ink Foundation, and Tyrdo have committed about 43,000 ETH in total, as protocols seek to limit spillover risks across interconnected DeFi systems. Arbitrum's approach also underscores the growing role of DAO-led crisis response, with the timing of fund movement now dependent on the outcome of the governance vote.