The Arbitrum DAO governance validated an Arbitrum proposal on May 7, 2026, to proceed with the release of 30,765 ETH, equivalent to 71 million dollars. These assets had been frozen by the network’s Security Council following a security incident that affected the Kelp DAO platform on April 21. The measure aims to restore part of the backing for the restaked asset rsETH and stabilize operational conditions within the decentralized financial ecosystem.
The voting process recorded massive participation, where 90.5% of the ballots, represented by 173.9 million Arbitrum (ARB) tokens, were in favor of the measure. Conversely, 9.4% of voters, holding 18.1 million tokens, opted for abstention, while opposition was marginal with fewer than 1,700 tokens against. The official close of the vote was set for 6:54 pm UTC this Thursday, solidifying the preliminary step toward a binding on-chain governance proposal.
The context for this decision dates back to the cyberattack suffered by Kelp DAO, where a perpetrator managed to drain approximately 116,500 restaked Ether (rsETH). At the time of the exploit, this amount represented a market value between 290 million and 293 million dollars. Following the incident, blockchain records indicated that the entity responsible moves 175 million dollars toward external wallets, forcing immediate intervention to mitigate the impact on other interconnected protocols.
The technical proposal was co-authored by prominent entities such as Aave Labs, Kelp DAO, LayerZero, EtherFi, and Compound. This document establishes guidelines for the unfrozen funds to be directed to a specific recovery address identified as ‘0xf22’. According to the proposal discussion forum in the governance portals, the management of these assets will be carried out through a Gnosis Safe vault with a 3-of-4 multi-signature scheme, integrating representatives from Certora and the involved foundations.
The liquidity crisis generated by the exploit caused a contagion effect that led to 15 billion dollar withdrawals within the Aave lending market. This capital flight forced Aave Labs to liquidate the attacker’s remaining positions on both the Ethereum mainnet and Arbitrum Layer 2, managing to secure a portion of the funds before the market suffered further degradation.
To address the aftermath of the hack, a coalition named “DeFi United” has been formalized. This group consists of protocols such as Mantle, EtherFi Foundation, Golem Foundation, Lido DAO, Ethena, LayerZero, Ink Foundation, and Tydro. These organizations have committed a total of 43,000 ETH, with an estimated value of 101 million dollars, exclusively dedicated to reducing the impact of the security breach and preventing the rsETH token from permanently losing its peg.
Despite the current efforts, the rsETH network still faces a shortfall of approximately 76,127 rsETH, which at current market values is around 174.5 million dollars. For this reason, the next administrative step following the Snapshot vote is the submission of a constitutional Arbitrum Improvement Proposal (AIP) through the Tally platform, which will provide the necessary legal and technical framework for the final execution of the asset unfreezing.
Treasury management and yield optimization in Arbitrum
Simultaneously with the Kelp DAO case, the Arbitrum DAO has advanced an independent proposal to optimize its institutional treasury as of May 7, 2026. The initiative considers the transfer of 6,000 ETH from general reserves to its Treasury Management Portfolio. This allocation represents approximately 14 million dollars in capital and was adjusted upward following technical feedback in community forums suggesting an increase from the initial 5,000 ETH threshold.
This financial management measure has received support from 99.9% of the voting power, equivalent to 185.7 million ARB tokens. In addition to the Ether, the plan includes moving 150,000 dollars in USDC that were sitting idle in the protocol’s balances. The objective is to allocate these resources to yield-generating strategies within the decentralized finance ecosystem operated by Arbitrum.
Projected calculations indicate that placing these 6,000 ETH in yield strategies could generate a return of an additional 288 ETH over the next year. Using a base price of $2,200 per asset, the DAO expects to add approximately $625,000 in value to its treasury. The vote for this fund movement will formally close on Friday at 2:22 pm UTC, marking a milestone in the maturation of the organization’s asset management.
This article is for informational purposes and does not constitute financial advice.
