Arbitrum Proposal to Unfreeze $71M ETH Gains 90% Approval

Alvin Lang May 07, 2026 14:57

With 90% approval, Arbitrum moves closer to releasing $71M in frozen ETH tied to the Kelp DAO exploit, pending final on-chain governance.

Arbitrum Proposal to Unfreeze $71M ETH Gains 90% Approval

Arbitrum is on track to unfreeze $71 million in Ether (ETH) tied to the Kelp DAO exploit, after over 90% of stakeholders voted in favor of the motion. The proposal, backed by a coalition of major DeFi players, aims to recover part of the losses from a high-profile exploit that drained $293 million worth of restaked Ether (rsETH) from Kelp DAO in April.

According to a voting snapshot, 90.5% of votes—representing 173.9 million Arbitrum (ARB) tokens—were cast in favor of the proposal, while 9.4% abstained and less than 1% opposed. The voting period is scheduled to close on Thursday at 6:54 pm UTC, after which the proposal will advance to a binding on-chain governance vote.

The funds, totaling 30,765 ETH, were initially frozen by Arbitrum’s Security Council on April 21 to prevent further fallout from the exploit. The proposal was co-authored by entities including Aave Labs, Kelp DAO, LayerZero, and EtherFi, marking a collaborative “DeFi United” recovery effort. This group has pledged an additional 43,000 ETH—worth roughly $101 million—to mitigate broader DeFi contagion from the incident.

Once approved, the funds will be transferred to a designated multi-signature wallet controlled by signers from Aave Labs, Kelp DAO, Certora, and EtherFi. The governance vote is seen as a critical step in stabilizing market confidence, though the exploit’s impact remains significant. Even with the recovery, rsETH’s backing still faces a shortfall of approximately 76,127 rsETH, currently valued at $174.5 million.

Arbitrum is also moving forward on another governance measure that seeks to allocate 6,000 ETH—currently worth $14 million—from its treasury into yield-generating strategies. This proposal, which has received near-unanimous support, is projected to generate roughly 288 ETH ($625,000) in yield over the next year, assuming an average ETH price of $2,200.

These developments highlight the growing role of decentralized governance in addressing complex challenges within the DeFi ecosystem. While the recovery efforts won’t fully erase the damage caused by the Kelp DAO exploit, they represent a coordinated attempt to restore stability and protect stakeholders.

The final on-chain vote for unfreezing the funds is expected soon, with results likely to shape the future of similar recovery mechanisms in decentralized finance.

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