After the April 18 rsETH incident, primary DeFi figures have begun a joint recovery operation. Aave service providers, Ether.fi KelpDAO LayerZero_Core, compound_xyz, and a few others have collectively drafted a governance proposal to the Arbitrum DAO asking for the release of the ETH frozen by the Arbitrum Security Council. The proposal is a step toward addressing the loss of the liquid restaking token rsETH through a single unified cross-protocol effort.
Governance Request to Arbitrum DAO
The paper requests the Arbitrum DAO to release the ETH currently in the possession of the Security Council. After the debates of the stakeholders, the group believes that the use of these assets is very important for the return to normal of rsETH.
The proposal is now available for community review. Its authors are waiting for the feedback from the Arbitrum community to make sure that governance is transparent and that everyone agrees on the recovery process.
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DeFi United Recovery Framework
If the funds are released, they will be given to DeFi United, a multi-protocol recovery initiative aiming at replenishing the backing of rsETH. The initiative plans to help affected users by gathering liquidity and coordinating support among the participating protocols.
The Arbitrum ETH allocation is considered a foundational step, with further contributions expected from other ecosystem partners to fully remediate the impairment. The contributors consider this to be a significant step toward the resolution, subject to further commitments from other parties.
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Implications and Next Steps
The proposal presents a possibility as well as complexities. A successful release might lead to the quick restoration of users and can serve as a demonstration of efficient cross-chain governance during emergencies.
However, the challenges are the consensus within the DAO, the security aspects, and the order of multi-protocol contributions. The result could establish a precedent in dealing with the restaking token risk on Layer 2 networks.
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