$71M in frozen ETH from Kelp exploit nears release following Arbitrum vote
The Snapshot voting process would advance the asset recovery initiative toward a binding onchain governance proposal within the Arbitrum ecosystem.
A collaborative proposal aimed at releasing approximately $71 million worth of Ether that was frozen following the Kelp DAO security breach is on track to receive approval later this Thursday, advancing a multi-protocol recovery initiative closer to partially restoring rsETH's asset backing.
More than 90.5% of the voting tokens supported the measure, accounting for 173.9 million Arbitrum (ARB) tokens, whereas 9.4%, equivalent to 18.1 million tokens, chose to abstain from voting. Fewer than 1%, representing just 1,700 tokens, cast votes opposing the proposal ahead of the voting period's scheduled conclusion at 6:54 pm UTC, based on a Snapshot captured at the time of publication.
Jointly authored by Aave Labs, Kelp DAO, LayerZero, EtherFi and Compound, the measure aims to unfreeze 30,765 Ether (ETH) that was locked down by Arbitrum's Security Council on April 21, just days following an attack that resulted in the drainage of approximately 116,500 restaked Ether (rsETH) from Kelp Dao, valued at between $290 million and $293 million during that period.
The measure represents the conclusion of the initial voting round, pushing the "DeFi United" recovery initiative closer to partially restoring rsETH's underlying backing and advancing the motion toward a definitive blockchain-based governance proposal. This development follows shortly after Aave Labs completed the liquidation of the Kelp DAO attacker's outstanding rsETH positions across both Ethereum and Arbitrum networks, bringing the resolution one step nearer to completion.
"DeFi United" represents a recovery initiative launched by various DeFi protocols, which include Mantle, EtherFi Foundation, Golem Foundation, Lido DAO, Ethena, LayerZero, Ink Foundation and Tydro, collectively committing 43,000 Ether (valued at approximately $101 million) to minimize the contagion impact resulting from the Kelp DAO security breach.
As the subsequent phase, the participating protocols will execute a snapshot "temperature check" designed to assess delegate opinion before the measure is ultimately submitted onchain through Tally as a Constitutional Arbitrum Improvement Proposal (AIP).
Pending a binding blockchain-based governance vote, the assets would be released to a designated recovery address '0xf22' within a 3-of-4 Gnosis Safe (SAFE) configuration with authorized signers representing Aave Labs, Kelp DAO, Certora and EtherFi.
Nevertheless, even should the final governance measure receive approval, rsETH's underlying backing continues to face a deficit of approximately 76,127 rsETH, presently valued at roughly $174.5 million. The proposal contended that even a partial restoration of rsETH's backing would contribute to stabilizing market conditions throughout the wider DeFi ecosystem.
Cointelegraph contacted Arbitrum and Aave requesting commentary regarding the subsequent phases in the governance procedure and the anticipated timeline for restoring rsETH's asset backing.
Arbitrum set to approve proposal for deploying 6,000 ETH to generate yield
The Arbitrum DAO is simultaneously positioned to greenlight a distinct proposal that would transfer 6,000 ETH, presently valued at approximately $14 million, from the DAO treasury into its Treasury Management Portfolio.
The measure increases the originally planned ETH allocation from 5,000 ETH to 6,000 ETH following community feedback received through the forum, based on discussions in the Arbitrum governance forum. The proposal additionally seeks to transfer approximately $150,000 in idle USDC into the portfolio for generating supplementary yield.
Greater than 99.9% of the voting power favored the proposal, accounting for 185.7 million ARB tokens, whereas 0.1%, equivalent to 266,930 ARB, chose abstention. The voting period is slated to conclude Friday at 2:22 pm UTC, based on data from Tally.
The 6,000 ETH designated for yield-generating strategies is forecast to produce an additional 288 ETH valued at approximately $625,000 over the coming year, presuming an ETH price point of $2,200, calculated using the current 30-day-average annualized rate.