Aave Labs has proposed that the decentralized autonomous organization behind Arbitrum unlock $73.5 million in Ether related to the Kelp DAO attack and direct these funds to “DeFi United”, a fund aimed at restoring rsETH and compensating its holders.
Last week, the Arbitrum Security Council moved to freezing 30,765 Ether (ETH) stored in a wallet connected to $293 million Using seaweed.
In a filing published Saturday on the Arbitrum governance forum, Aave Labs he said directing these funds towards planned remediation efforts would “restore normal conditions for Arbitrum users” and the broader ecosystem, and that Ether on Arbitrum “represents a significant contribution” to the recovery of the Kelp DAO Restacked ETH token (rsETH).
The report was submitted with support from Kelp DAO, LayerZero, Ether.fi and Compound, four of several cryptographic protocols affected by the attack.
DeFi United sees $21 million in contributions
The proposal comes a few days after Aave Labs and others organize something on Friday “DeFi United” to fully restore rsETH support.
Dune analytics data shows that approximately $21 million has already been contributed, including from Aave Labs CEO Stani Kulechov, Aave Labs head of contracts Emilio Frangelli, Kelp DAO, Golem Foundation, Web3 development platform BGD Labs and Babylon, DeFi protocol native to Bitcoin.
Arbitrum, Mantle, Ether.fi and Lido contributed another $215 million to support recovery efforts, which are subject to a vote by authorities.
LayerZero, Ethena, Ink Foundation and Frax Finance have also signaled their willingness to assist.
Source: Ghost
Aave was hit tough via the Kelp DAO exploit with the total value locked falling nearly $12 billion in a week after a hacker placed stolen rsETH tokens as collateral on its lending platform to borrow wrapped Ether, leaving over $190 million in bad debt and triggering a wave of withdrawals.
Aave sets a seven-week timeline for the recovery plan
In the Arbitrum proposal, Aave Labs stated that a full recovery would not only restore rsETH support, but also normalize conditions for its holders, liquidity providers and borrowers on Arbitrum and throughout the broader DeFi ecosystem.
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Even “a partial recovery would still significantly reduce shortages,” Aave Labs added.
Aave Labs specifically requested that 30,765 Ether be transferred to a recovery address controlled by Aave, Kelp DAO, and blockchain security platform Certora.
Aave Laboratories stated that it expects efforts to restore rsETH and compensate its holders to take approximately 49 days and that it will refund funds if remediation efforts are unsuccessful.
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