Arbitration DAO (Arbitrum’s Decentralized Autonomous Organization) plans to allow the release frozen ETH, worth around USD 71 million, as a response to the exploit that occurred on April 18 on the KelpDAO protocol. There was massive community support for that decision. Over 90.5 percent of tokens (173.9 million ARB) were cast in favor, while less than 1 percent voted against.
The release frozen ETH: How it works
The funds (30,765 ETH frozen by the Arbitrum Security Council on April 21) were seized days after an attacker drained approximately 116,500 rsETH (worth around USD 290-293 million) from KelpDAO via a LayerZero bridge vulnerability. The proposal, co-authored by AaveLabs, KelpDAO, LayerZero, EtherFi, and Compound, directs the ETH to “DeFi United,” an across-protocol recovery effort that has already pledged 43,000 ETH, worth about USD 101 million from Mantle, EtherFi Foundation, Golem Foundation, Lido DAO, Ethena, LayerZero, Ink Foundation, and Tydro.
The release frozen ETH decision comes after Aave Labs successfully liquidated the KelpDAO hacker’s remaining rsETH positions on both Ethereum and Arbitrum, moving the recovery effort closer to resolution.
Community Response and Possible Legal Challenges
Legal challenges to the release of the funds largely contributed to delays in the process, including attempts by parties seeking to freeze the assets of the North Korean hackers associated with the funds, claims that had nothing to do with this incident.
However, the DAO has been focused on enabling victims to recover their losses and has seen strong community support (with only 1,700 ARB tokens, or less than 0.01 percent of all votes, against the proposal).
Future Steps
The final vote is anticipated to take place on May 7 or 8 (2026), which will allow the transfer of funds from the temporary multi-sig address to DeFi United. Following the “temperature check” snapshot vote, the DAO will prepare to present a formal onchain governance proposal [Constitutional Arbitrum Improvement Proposal (AIP)] to Tally for a vote.
