GLOBAL, May 1, 2026 – The Arbitrum DAO began a formal governance vote on May 1, 2026, to move approximately $71 million in digital assets to a specialized recovery fund. The proposal suggests transferring 30,766 ETH (Ethereum) to the DeFi United fund. This industry-wide effort was created to help victims and protocols affected by a major security breach that took place on April 18, 2026.
The original incident involved an exploit of Kelp DAO, a decentralized finance platform. During that event, hackers caused a loss of roughly $292 million. The DeFi United fund is now acting as a relief effort led by Aave, a popular lending tool. It has received support from many large companies and individuals in the crypto industry.
The specific funds currently being voted on are held in an interim wallet. These assets were previously frozen by the Arbitrum Security Council. The council took this action to stop the attacker from moving the stolen money out of the network. If the members of the Arbitrum DAO (a decentralized autonomous organization that governs the protocol) approve the move, it will represent the largest single contribution to the recovery project so far.
Reports from Standard Chartered and other industry analysts explain how the original theft happened. The attacker used a vulnerability in a cross-chain bridge (a tool that lets different blockchains talk to each other) to mint 116,500 rsETH tokens. These tokens were "unbacked," meaning they did not have the actual deposits required to give them value. The attacker then used these fake tokens as collateral (something of value used to secure a loan) to borrow approximately $236 million in Wrapped Ethereum (WETH).
The DeFi United coalition wants to use the recovery fund to restore the backing of rsETH tokens. They also want to remove "bad debt" from lending systems like Aave and Compound. Bad debt refers to loans that cannot be repaid because the value of the collateral has dropped or was fake to begin with.
By May 1, the relief fund had already collected more than $314 million in commitments and pledges. This amount is higher than the original $290 million deficit caused by the hack. Several major players have contributed to this total. ConsenSys and its founder Joseph Lubin pledged 30,000 ETH. Mantle provided a loan of 30,000 ETH, and Aave Labs CEO Stani Kulechov gave 5,000 ETH.
The technical plan for using these funds involves a multi-step process. The coalition plans to turn the committed ETH into rsETH in smaller groups, or tranches. They also plan to update oracle prices (the data feeds that tell the system how much a token is worth) to help liquidate the attacker's remaining positions. Liquidation is a process where the system automatically sells off a borrower's assets to pay back a loan.
The vote by Arbitrum DAO members is a key part of this roadmap. According to reports from ForkLog and MEXC News, the move would significantly bolster the liquidity available to fix the damage caused by the 2026 exploit. The Security Council's decision to freeze the funds earlier in the process made this current vote possible by keeping the assets within reach of the community.
Sources
ForkLog (Published: May 1, 2026, 06:00 UTC)
Stocktwits / Standard Chartered (Updated: April 29, 2026, 10:03 AM)
MEXC News (Published: April 30, 2026, 15:00 UTC)
Travers Smith (Published: April 30, 2026)
