"30,000 ETH to be released"...Arbitrum, DeFi bailout 'final decision' imminent

▲ Ethereum (ETH), Decentralized Autonomous Organization (DAO)/AI generated image

Arbitrum (ARB) DAO (Decentralized Autonomous Organization) stands at a critical crossroads regarding whether to inject industry-wide bailout funds into the 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 the 30,766 ETH frozen by the security committee into DeFi United. Earlier, on April 20, the Arbitrum Security Committee urgently froze wallets linked to the Kelp DAO hacker, preventing further movement of approximately $71.5 million worth of 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 bailout 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 held in an intermediate wallet controlled by Arbitrum DAO governance, and requires official DAO approval procedures to be used for actual bailout. The market views these assets, if released, as a key resource to mitigate the risk of cascading failures in the DeFi ecosystem and restore investor confidence. In particular, as the hacker is known to have already 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 emergency freezing authority, even at the cost 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 bailout fund, it is highly likely that a precedent will be set for resolving individual project crises through collective 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 largely alleviated, and liquidity pressure on major lending platforms such as Aave could also decrease. Arbitrum's decision is expected to redefine security standards and crisis response systems in the future virtual asset market.

*Disclaimer: This article is for investment reference only and does not take responsibility for investment losses based on it. The content should be interpreted for informational purposes only.*