"30,000 ETH to be released"...Arbitrum's 'Final Decision' on DeFi Bailout Imminent

▲ Ethereum (ETH), Decentralized Autonomous Organization (DAO)/AI Generated Image

Arbitrum (ARB) DAO (Decentralized Autonomous Organization) is at a critical juncture regarding the deployment of an industry-wide joint bailout for large-scale Ethereum assets frozen due to the Kelp DAO hacking incident.

According to virtual asset specialized media Cointelegraph on April 27 (local time), a proposal is rapidly gaining traction within the Arbitrum community to inject 30,766 ETH, frozen by the security committee, into DeFi United. Previously, on April 20, the Arbitrum security committee urgently froze wallets linked to the Kelp DAO hacker, blocking further movement of approximately $71.5 million in assets. This was a measure to prevent money laundering by the hacker who exploited a LayerZero-based bridge vulnerability to steal a total of $293 million.

DeFi United is an industry-wide joint relief fund led by Aave (AAVE) founder Stani Kulechov. Its goal is to resolve non-performing loans resulting from the Kelp DAO hack and restore the collateral value of Restaked ETH (rsETH). Major projects are successively participating, with Mantle (MNT) already proposing a 30,000 ETH loan and Aave DAO deciding to inject 25,000 ETH. However, considering the total damage, funds are still insufficient.

The currently frozen 30,766 ETH is stored in an intermediary wallet controlled by Arbitrum DAO governance, and its actual use for a bailout requires official DAO approval. The market believes that if these assets are released, they will become a key resource to mitigate the risk of cascading failures in the DeFi ecosystem and restore investor confidence. In particular, as the hacker is already known to have laundered over 75,700 ETH, the strategic utilization of the remaining frozen assets is considered crucial.

This issue has emerged as a watershed moment testing the self-purification capability of the DeFi industry. As Arbitrum exercised its emergency freezing authority, even at the risk of centralization controversy, attention is focused on how the secured assets will be reallocated to stabilize the ecosystem. If the funds are indeed injected into the relief fund, it is highly likely to set a precedent for resolving individual project crises through a joint industry response.

The DeFi market is now awaiting the results of Arbitrum DAO's governance vote. If the frozen assets flow into DeFi United, the rsETH collateral shortage problem is expected to be significantly alleviated, and liquidity pressure on major lending platforms like Aave may also decrease. Arbitrum's decision is expected to redefine security standards and crisis response systems in the future virtual asset market.

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