On April 25, 2026, a coalition led by Aave Labs, KelpDAO, Layerzero, Etherfi, and Compound submitted a constitutional Arbitrum Improvement Proposal (AIP) on the Arbitrum governance forum, requesting that the Arbitrum DAO release 30,765.67 ETH frozen after the KelpDAO exploit on April 18.
Exploit Background and Asset Freeze
The incident originated from a bridge vulnerability in the KelpDAO rsETH system. According to a Llamarisk incident report, the KelpDAO rsETH Unichain-to-Ethereum bridge released 116,500 rsETH on Ethereum without a corresponding source-side burn, breaking the core invariant that Ethereum-side locked rsETH must cover remote-chain minted supply. At the time of the report, only 40,373 rsETH remained in the adapter as confirmed backing for 152,577 rsETH in remote-chain claims, resulting in a backing shortfall of approximately 76,127 rsETH.
During the exploit, the attacker supplied 89,567 rsETH to Aave across its Ethereum Core and Arbitrum markets and borrowed 82,650 WETH plus 821 wstETH against those positions. The proposal authors explicitly stated that Aave's smart contracts were not compromised; the incident originated entirely outside the protocol.
On April 21, the Arbitrum Security Council froze 30,765.667501709008927568 ETH and transferred them to address 0x0000000000000000000000000000000000000DA0, making clear that a governance vote would be required before they could be moved again.
Proposal Details and Fund Allocation
The proposal requests sending the frozen ETH to a 2-of-3 Gnosis Safe (address 0xf228130ce4fAB082C7D5522c90833cec83A9C15e) controlled by signers from Aave, KelpDAO, and Certora. The funds will be used solely to remediate losses arising from the exploit, helping close the rsETH backing gap and move the asset closer to full collateralization. If the coordinated recovery does not proceed as planned, the parties have committed to return to Arbitrum Governance for further direction.
No new treasury allocation is requested. The proposal asks only for the release of funds already frozen on Arbitrum One. The direct budgetary cost to the Arbitrum DAO is expected to be zero, aside from standard governance execution overhead.
Governance Timeline and Indemnification
The proposal estimates approximately 49 days from forum publication to execution: one week forum discussion, one week temperature check, three-day voting delay, 14-day onchain vote, eight-day L2 waiting period, one week L2-to-L1 message finalization, and a final three-day L1 waiting period. A Snapshot temperature check may precede the onchain vote. If it advances, the onchain vote will be submitted through Tally targeting the Arbitrum Core governor as a Constitutional AIP.
Aave Labs included a full indemnification commitment, agreeing to indemnify the Arbitrum Foundation, Offchain Labs, the Arbitrum Security Council, and each of its members against any claims arising from the freeze, release, or any related enforcement action. The authors stated that the outcome for Arbitrum users is better than leaving the funds frozen, whether the recovery is full or partial.