A joint proposal, expected to pass later Thursday, would unfreeze approximately $71 million worth of Ethereum frozen following the Kelp DAO attack, bringing a cross-protocol recovery effort closer to restoring some support to rsETH.
As of press time, over 90.5% of the tokens voted in favor of the motion, representing 173.9 million Arbitrum (ARB) tokens; 9.4%, or 18.1 million tokens, abstained. According to Snapshot data, less than 1%, or 1,700 tokens, voted against the motion before the voting period was scheduled to end at 6:54 PM UTC.
The proposal, initiated by Aave Labs, Kelp DAO, LayerZero, EtherFi, and Compound, aims to unfreeze 30,765 Ethereum (ETH) tokens frozen by the Arbitrum security committee on April 21. Several days prior, an attacker transferred approximately 116,500 resold ETH (rsETH) from the Kelp DAO, at the time valued between $290 million and $293 million.
This proposal marks the end of the first round of voting, bringing the "DeFi United" recovery initiative closer to restoring partial support for rsETH and advancing the motion into a final on-chain governance proposal. Shortly before this, Aave Labs had already liquidated the remaining rsETH positions held by the Kelp DAO hack on Ethereum and Arbitrum, bringing the resolution of the incident a step closer.
"DeFi United" is a resurgence effort comprised of the following DeFi protocols: Mantle, EtherFi Foundation, Golem Foundation, Lido DAO, Ethena, LayerZero, Ink Foundation, and Tydro. They have pledged a total of 43,000 ETH, worth approximately $101 million, to mitigate the contagion effect of the Kelp DAO attack.
Next, these protocols will undergo a snapshot "temperature check" to assess the representatives' attitudes before the proposals are finally passed through Tally and submitted on-chain as a constitutional Arbitrum Improvement Proposal (AIP).
A joint proposal from the Arbitrum Security Committee to freeze funds. Source: Snapshot.org
Once approved by a binding on-chain governance vote, these funds will be released to the designated warmup address "0xf22" and stored in a 3-of-4 Gnosis Safe (SAFE) with signatories from Aave Labs, Kelp DAO, Certora, and EtherFi.
However, even if the final governance proposal is passed, rsETH will still face a shortfall of approximately 76,127 rsETH, currently valued at about $174.5 million. The proposal argues that even partially restoring rsETH's support would help stabilize market conditions within the broader DeFi ecosystem.
Cointelegraph has contacted Arbitrum and Aave for comment on the next steps in the governance process and the proposed timeline for restoring rsETH support.
Arbitrum will propose deploying 6,000 ETH for yield.
Arbitrum DAO will also approve another proposal to transfer 6,000 ETH (currently worth approximately $14 million) from the DAO treasury to its Treasury Management Portfolio.
Based on feedback from the Arbitrum governance forum, the proposal increases the planned ETH allocation from 5,000 ETH to 6,000 ETH. It also aims to transfer approximately $150,000 of idle USDC into the portfolio to generate additional returns.
According to Tally's data, over 99.9% of the votes supported the proposal, representing 185.7 million ARB tokens; 0.1%, or 266,930 ARB, abstained. The voting window is expected to close at 2:22 PM UTC on Friday.
A proposal to transfer 6,000 ETH into the Arbitrum DAO portfolio. Source: alt.gov.arbitrum.foundation.
Based on the current 30-day average annualized yield, the 6,000 ETH allocated to the yield strategy is expected to generate an additional 288 ETH over the next year, worth approximately $625,000, assuming an ETH price of $2,200.
