Aave Labs Proposes Unfreezing $73.5 Million in Kelp Exploit Funds to Restore rsETH

[AIcash]

Aave Labs has submitted a governance proposal to the Arbitrum DAO requesting the release of $73.5 million in frozen Ether connected to the $293 million Kelp DAO exploit, with the funds to be directed toward "DeFi United" — a coordinated recovery effort aimed at restoring the rsETH token and compensating its holders. Last week, the Arbitrum Security Council froze 30,765 ETH held in a wallet linked to the attacker, and Aave Labs is now arguing that redirecting those funds toward remediation would restore normal conditions for Arbitrum users and the wider DeFi ecosystem. The proposal was submitted with the backing of Kelp DAO, LayerZero, Ether.fi, and Compound — four of the protocols directly affected by the hack.

Aave Labs has specifically requested the frozen ETH be sent to a recovery address jointly controlled by Aave, Kelp DAO, and blockchain security platform Certora. The firm estimates the full recovery process will take approximately 49 days and has committed to returning the funds if the effort falls through. Even a partial recovery, Aave Labs noted, would meaningfully reduce the shortfall and normalize conditions for rsETH holders, liquidity providers, and borrowers across Arbitrum and the broader ecosystem.

[kevin1]

Competing protocols coordinating a $236M+ recovery fund for a hack that hit one of them is genuinely unprecedented — it signals that DeFi's largest players now recognize that contagion risk makes ecosystem collapse their problem too, regardless of which protocol gets exploited.

[etfs]

Aave, Kelp, Arbitrum, Mantle, Lido, LayerZero, Ethena, Frax all in one recovery group. the exploit accidentally created a DeFi summit nobody RSVPd to.