Aave urges Arbitrum to release 30,765 ETH from Kelp exploit to “DeFi United”

Aave Labs has proposed an Arbitrum governance action to unfreeze 30,765 ETH tied to the Kelp DAO exploit and redirect the funds to “DeFi United,” a recovery plan focused on restoring rsETH backing and compensating holders. The proposal follows a prior Arbitrum Security Council freeze of 30,765 ETH connected to the estimated $293 million Kelp attack. Aave said the ETH on Arbitrum is a “material contribution” toward rebuilding rsETH collateral and aims to restore normal conditions for Arbitrum users and the broader DeFi ecosystem. The funds would be sent to a recovery address controlled by Aave, Kelp DAO, and Certora. Aave expects the restoration and compensation process to take about 49 days and would return the funds if the recovery plan fails. “DeFi United” funding is already underway: Dune Analytics shows about $21 million in contributions, while an additional $215 million is pledged by protocols including Arbitrum, Mantle, Ether.fi, and Lido—subject to governance votes. Other supporters have signaled intent to help as well. Traders should note this comes after the Kelp hack battered Aave, driving a sharp rise in bad debt and triggering withdrawals—so execution risk remains until governance approval and the remediation milestones are met. Aave’s move is a step toward stabilization, but near-term sentiment may still track hack-related uncertainty.