A proposal to release more than 30,765 ETH frozen by the Arbitrum Security Council has moved to Snapshot for its first round of voting. The proposal seeks approval from Arbitrum governance to send the immobilized ETH into a coordinated recovery effort aimed at restoring rsETH’s backing and improving market conditions for affected users.

The proposal has been authored by Aave Labs, KelpDAO, LayerZero, EtherFi, and Compound. It asks Arbitrum DAO to approve the release of 30,765.67 ETH that was frozen after the rsETH incident and moved to a designated address controlled through Arbitrum governance processes.

If passed, the funds would be sent to a recovery address managed through a 3-of-4 Gnosis Safe with signers from Aave, KelpDAO, EtherFi, and Certora. The ETH would then be used to support remediation for losses linked to the exploit and help restore backing for rsETH.

• What Happened?
• Why the ETH Was Frozen
• The rsETH Backing Problem
• How the Recovery Would Work
• What Happens Next?

What Happened?

The incident began with an exploit involving rsETH, a liquid restaking token issued by KelpDAO. According to the proposal, the issue created a deficit in rsETH’s backing after 116,500 rsETH was released on Ethereum without a corresponding burn on the source side.

This broke the expected bridge invariant, where Ethereum-side locked rsETH should properly cover remote-chain minted supply. As a result, there was a major mismatch between rsETH claims and the confirmed backing available in the adapter.

The proposal cites an incident report stating that only 40,373 rsETH remained as confirmed backing for 152,577 rsETH of remote-chain claims. This created an estimated shortfall of around 76,127 rsETH.

While Aave’s own smart contracts were not compromised, the exploit affected Aave markets because the exploiter had supplied rsETH as collateral and borrowed against it. Across Aave’s Ethereum Core and Arbitrum markets, the exploiter supplied 89,567 rsETH and borrowed 82,650 WETH plus 821 wstETH.

Why the ETH Was Frozen

On April 21, 2026, the Arbitrum Security Council froze 30,765.667501709008927568 ETH connected to the exploiter on Arbitrum One. The funds were moved to the address 0x0000000000000000000000000000000000000DA0.

The Security Council’s action immobilized the funds, but it did not automatically determine what would happen to them next. For the ETH to be released, Arbitrum governance must approve a further action. This is why the current proposal is necessary. The funds are already frozen, but the DAO must decide whether they should be sent into the coordinated recovery process.

The proposal frames this as a one-time measure because the funds are already secured, the affected parties are coordinating on recovery, and the main remaining question is where the frozen ETH should go.