Aave & Kelp’s $71M ETH Crisis

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Aave Labs, Kelp DAO, LayerZero, EtherFi, and Compound have launched a desperate plea to Arbitrum DAO for a $71 million ETH lifeline. Because nothing says “I’m sorry” like a 49-day wait for your money.

  • Aave and Kelp want Arbitrum DAO to release 30,765 ETH for rsETH recovery efforts. Because why let a few million dollars rot in a vault when you can debate it for a month?
  • The funds would move to a Gnosis Safe managed by Aave, Kelp and Certora. Because nothing says “trust us” like a 2-of-3 wallet.
  • Some Arbitrum delegates warned that the 49-day governance process may delay urgent recovery plans. Oh, right-because the exploiters are definitely waiting patiently for your approval.

The assets were frozen by the Arbitrum Security Council after being linked to the exploiter. Because obviously, the first step in a crisis is to lock up the money and yell “NOPE!”

The frozen ETH is worth about $71 million, based on Ethereum trading near $2,317 at the time of writing. The proposal would direct the funds to DeFi United, a cross-protocol recovery effort formed after the $292 million Kelp DAO exploit. Because nothing says “we’ve got this” like a group of protocols that just got robbed.

Funds would support rsETH backing

The proposal says the recovered ETH would move to a 2-of-3 Gnosis Safe controlled by Aave, Kelp DAO, and Certora. Because nothing says “collaboration” like three entities fighting over who gets to spend the money.

If the recovery plan does not continue as expected, the authors said they would return to Arbitrum governance for further direction. Because nothing says “we’re in control” like a 49-day loop.

Kelp DAO wrote on X, “Every ETH released moves rsETH holders closer to whole.” Because obviously, the solution to a hack is to hand out more ETH like it’s a holiday.

Moreover, the filing also details the exploiter’s position on Aave. It says the attacker supplied 89,567 rsETH as collateral and borrowed 82,650 WETH and 821 wstETH across Aave’s Ethereum Core and Arbitrum V3 markets. Because nothing says “I’m a bad actor” like taking out a loan while robbing you.

Aave said its smart contracts were not compromised. The proposal presents the incident as an external exploit that affected assets used across DeFi markets, rather than a direct failure in Aave’s lending system. Because of course it’s everyone else’s fault.

Governance timeline draws questions

The release request may face timing pressure because Arbitrum’s Constitutional AIP process can take about 49 days. That process includes forum review, possible temperature checks, voting delays, onchain voting, and cross-chain execution steps. Because nothing says “urgency” like a 49-day checklist.

Some delegates have questioned whether that timeline is too long for users with active Aave positions. Delegate Nicksta wrote that “many parties have open positions on AAVE that might run into problem if they have to wait 49 days.” Because clearly, the solution is to let a few million dollars sit in limbo while we debate.

Arbitrum Security Council member Griff Green also backed a faster community signal. Speaking as a delegate, he said the DAO should move to Snapshot “as soon as possible” to confirm community intent before final execution. Because obviously, the community’s opinion is the only thing that matters… until it’s not.

Green also asked for clearer details on how rsETH holders and Aave users would be treated under full or partial recovery plans. The proposal includes an indemnification clause from Aave Labs covering the Arbitrum Foundation, Offchain Labs, and Security Council members. Because nothing says “we’re responsible” like a legal loophole.

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2026-04-26 12:30