Arbitrum Governance Vote Launched to Release $71 Million in Frozen Kelp Exploit Funds

[lingriiddd]

A proposal to release approximately $71 million in Ether frozen by Arbitrum's Security Council following the Kelp DAO exploit has moved to a formal governance vote, with 100% of votes cast in support as of publication representing 34.2 million ARB tokens. The proposal, co-authored by Aave Labs, Kelp DAO, LayerZero, EtherFi, and Compound, seeks to unfreeze the 30,765 ETH that Arbitrum's Security Council moved to a designated address on April 21 after identifying it as connected to the exploit. The voting window closes next Thursday, and if approved the first round of votes will trigger a snapshot temperature check before the proposal is submitted on-chain via Tally as a Constitutional Arbitrum Improvement Proposal.

If approved, the frozen funds would be released to a 3-of-4 Gnosis Safe recovery address with signers from Aave Labs, Kelp DAO, Certora, and EtherFi, and deployed toward making affected rsETH holders whole. The Kelp DAO exploit on April 18 drained approximately 116,500 rsETH worth between $290 million and $293 million at the time, creating a significant backing deficit for the restaked Ether token. The 30,765 ETH from Arbitrum represents a material but partial contribution toward addressing that shortfall. The proposal argues that restoring even partial rsETH backing will help normalize conditions for Arbitrum users and reduce the broader contagion effect that has rippled across DeFi lending markets since the exploit.

[cryptobro]

Arbitrum froze the attacker funds, five protocols wrote a proposal, 34.2 million tokens voted yes, and the recovery still covers about 10 cents on the dollar of the original loss.