Aave Labs has teamed up with KelpDAO, LayerZero, EtherFi, Compound, and other key participants to ask Arbitrum’s governance community to unlock roughly $71 million in Ethereum that was seized earlier this month. The assets—precisely 30,765.67 ETH—were frozen by Arbitrum’s Security Council on April 21 and moved to a controlled address after the April 18 breach that drained approximately 116,500 rsETH through a compromised LayerZero bridge.
The proposal, filed as a Constitutional AIP on April 25, would route these funds into an ongoing multi-protocol recovery program aimed at fully restoring rsETH’s collateral backing and making affected holders whole.
The exploit created a substantial shortfall in rsETH’s reserves, triggering bad debt across lending platforms, including Aave’s deployments on Ethereum and Arbitrum.
Attackers had used the stolen tokens as collateral to borrow wrapped ETH before markets were paused.
The frozen ETH on Arbitrum now represents a critical recovered portion of the losses—about a quarter of the total drained value—and its release would directly reduce the impairment on rsETH while easing pressure on interconnected DeFi markets.
Under the plan, the ETH would be sent to a secure 2-of-3 Gnosis Safe controlled by Aave Labs, KelpDAO, and Certora for exclusive use in the remediation effort. If the recovery falls short, the parties have committed to returning to Arbitrum governance for further guidance.
This initiative, often referred to in ecosystem discussions as a unified DeFi response, highlights how quickly protocols can mobilize when user funds and protocol solvency are at stake.
It also tests Arbitrum’s governance process, requiring token-holder approval to move funds previously immobilized under emergency powers.
Adding momentum from another major blockchain, the Solana Foundation has stepped forward with concrete support for Aave.
Foundation Chair Lily Liu announced that the organization has deployed USDT from its treasury into Aave for the first time, providing immediate liquidity to help stabilize the protocol during the recovery phase.
Liu emphasized that Solana’s health is tied to the broader DeFi ecosystem’s stability.
At the same time, the Foundation confirmed plans to launch the AAVE governance token on Solana as soon as this weekend, potentially opening new avenues for liquidity and user participation on the high-speed network.
Together, these steps demonstrate a maturing DeFi landscape where Layer-2 governance decisions, cross-protocol coordination, and Layer-1 liquidity injections work in tandem to contain incidents and rebuild trust.
The Arbitrum proposal is now open for community discussion and voting, while Solana’s contributions underscore growing interoperability across chains. Meaningful progress to some extent here could serve as a blueprint for handling future systemic events, prioritizing user protection and protocol resilience over fragmented responses.
