TLDR:
- Aave and partners submitted a governance proposal asking Arbitrum DAO to release 30,765.67 frozen ETH.
- The April 18 rsETH exploit created a backing shortfall of approximately 76,127 rsETH across the protocol.
- Released ETH would go to a 2-of-3 Gnosis Safe controlled by Aave Labs, KelpDAO, and Certora signers.
- The full governance process spans roughly 49 days before any ETH release can be formally executed.
Aave service providers, alongside KelpDAO, LayerZero, EtherFi, and Compound, have submitted a governance proposal to the Arbitrum DAO.
The proposal requests the release of 30,765.67 ETH frozen by the Arbitrum Security Council. The funds, frozen following the April 18 rsETH exploit, would go toward a coordinated cross-protocol recovery effort.
The goal is to restore rsETH’s backing and reduce losses for affected users across DeFi.
Arbitrum Governance Asked to Unlock Frozen ETH
The Arbitrum Security Council froze the ETH on April 21, 2026, moving it to a designated address after identifying the exploiter’s holdings.
A subsequent governance vote is required before any release can happen. The proposal was submitted on April 25, 2026, and is now open for community review and feedback.
Aave posted on X, stating that the proposal aims to direct the recovered funds into DeFi United, a coordinated recovery effort.
The post noted that releasing the ETH “would meaningfully advance the path to resolution as others confirm their commitments.” The Arbitrum community is invited to share feedback on the forum.
The LlamaRisk April 20 incident report confirmed the scale of the problem. The KelpDAO rsETH Unichain-to-Ethereum bridge released 116,500 rsETH on Ethereum without a corresponding burn on the source side.
At the time of the report, only 40,373 rsETH remained as confirmed backing for 152,577 rsETH in remote-chain claims, leaving a shortfall of approximately 76,127 rsETH.
The 30,765.67 ETH currently frozen on Arbitrum represents a material portion of what is needed to close that gap. Returning those funds to the recovery effort would directly reduce the backing shortfall and improve conditions for rsETH holders across multiple protocols.
Coordinated Recovery Effort Targets Full Collateralization
If the proposal passes, the ETH will be sent to a 2-of-3 Gnosis Safe at a designated recovery address. Signers from Aave Labs, KelpDAO, and Certora will control the multisig. The funds are intended solely for remediating losses from the exploit.
Within Aave’s Ethereum Core and Arbitrum markets, the exploiter supplied 89,567 rsETH and borrowed 82,650 WETH plus 821 wstETH against those positions. Aave’s smart contracts were not compromised, as the incident originated outside the protocol entirely.
The proposal timeline spans approximately 49 days in total. This includes a one-week forum discussion period, a Snapshot temperature check, a 14-day onchain vote, and various waiting and finalization periods across both L2 and L1.
No new treasury allocation is requested from Arbitrum DAO, as the ETH is already frozen and awaiting a governance decision on its destination.
A partial recovery would still reduce the shortfall proportionally, improving outcomes for affected users even if full collateralization is not immediately achieved.
