Aave Labs has proposed that the Arbitrum Decentralized Autonomous Organization (DAO) release the 30,765 ETH frozen by its Security Council (tied to the KelpDAO exploit) and redirect the funds to DeFi United, a recovery effort designed to restore rsETH and compensate holders. The submission is supported by Kelp DAO, LayerZero, Ether.fi, and Compound, stating that these frozen ETH are arguably a significant amount of funds that can help offset the damage caused by the exploit.
What is DeFi United?
DeFi United is a cross-protocol recovery initiative that was started on April 25th, 2026, and was created to help recover funds from the Kelp DAO hack, which resulted in detrimentally influencing approximately USD 190 million in bad debt on Aave. The goal of DeFi United is to restore the full value of rsETH, which is the token that had been restaked, and it’s the center of the exploit. According to Dune Analytics, DeFi United’s funding to date has exceeded USD 235 million, at the time of writing, and includes contributions from Aave leadership, Kelp DAO, Golem Foundation, Babylon Foundation, and others.
In addition, Arbitrum, Mantle, Ether.fi, Lido, LayerZero, Ethena, Ink Foundation, and Frax Finance have additionally committed USD 215 million to help with the recovery (pending votes by each governance body). Aave Labs has requested 49 days to perform this recovery effort and will return all funds if recovery cannot be achieved within this time frame.
Nevertheless, you can also contribute to this effort through their site defiunited.world.
Importance of This Contribution
The impact of the KelpDAO exploit has caused a domino effect within the decentralized finance (DeFi) sector. The hacker used stolen rsETH as collateral for borrowing wrapped ETH from Aave and created over USD 190 million in bad debt while wiping almost USD 12 billion in total value locked (TVL) from the lending protocol in one week. By directing the frozen ETH to DeFi United, it would not only restore the backing of rsETH but also “restore normal conditions for Arbitrum users and the broader ecosystem,” according to the proposal.
Next Steps
The Arbitrum DAO will now begin reviewing and voting on the proposal (once the review board is formed). If approved, the funds will be sent to a recovery address controlled by Aave, Kelp DAO, and security platform Certora. There will also be other governance votes needed across the pledging protocols to determine if an additional USD 215 million will materialize.
