Arbitrum governance has moved ahead with a proposal to release 30,765 ETH, valued in the proposal at about $71 million, to address liquidity disruption tied to Kelp DAO. The funds were frozen by the Security Council on April 21 and are now moving through a DAO vote. The stated goal is to support affected DeFi protocols and reduce the immediate strain left by the April 18 incident.
The release still depends on governance approval
Governance documents show that the ETH is currently held at a designated address. The proposal was co-authored by Aave Labs, Kelp DAO, LayerZero, EtherFi, and Compound. It will not be executed unless governance gives final approval. Voting data cited in the proposal shows full support so far from participating tokens, representing more than 34 million ARB.
If approved, the ETH would be sent to a recovery wallet protected by a 3-of-4 Gnosis Safe. The listed signers are Aave Labs, Kelp DAO, Certora, and EtherFi. Before the final onchain submission through Tally, the process also includes a Snapshot temperature check, adding another review stage before execution.
The proposal covers only part of the rsETH shortfall
The plan does not close the full gap created by the exploit. According to the proposal, the April 18 incident released 116,500 restaked ETH without a matching burn. That created a mismatch between issued rsETH and the collateral actually held underneath it.
Current figures in the documents show about 152,577 rsETH outstanding against only 40,373 held as backing. That leaves a shortfall of roughly 76,127 rsETH, valued at nearly $174.5 million. The 30,765 ETH under consideration would address only part of that deficit. The recovery effort is aimed at easing near-term liquidity pressure, not fully eliminating the imbalance in one step.
Other protocols have pledged another 43,000 ETH
The Arbitrum-linked release is only one piece of the recovery framework. The proposal says that Mantle, EtherFi Foundation, Golem Foundation, Lido DAO, Ethena, LayerZero, Ink Foundation, and Tyrdo have collectively pledged about 43,000 ETH.
The coordinated response shows how liquidity links across DeFi protocols can transmit stress from one system to another. It also shows the growing use of DAO governance in crisis response. The speed of the recovery process now depends on whether the vote clears the remaining approval steps.