Aave Labs, KelpDAO, LayerZero, EtherFi, and Compound filed an amended Constitutional AIP seeking to update the execution path for the previously approved transfer of 30,765 ETH frozen by the Arbitrum Security Council following the April 18 rsETH exploit. The amendment comes after a May 8th court order, which authorized the onchain transfer but required the ETH to move to a wallet controlled by Aave LLC rather than the originally proposed 3-of-4 Gnosis Safe.

The amendment only changes the recipient address and custody mechanics. The recovery objective remains the same: restoring rsETH's backing within the Kelp protocol. Aave LLC will need to hold the ETH under the terms of the restraining notice from Kim v. DPRK and cannot use the funds until the court rules further. Arbitrum delegates can now vote on the amended proposal onchain.

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United States District Judge Margaret M. Garnett signed a court order to allow an onchain governance vote to transfer the 30,765 frozen ETH from the ArbitrumDAO to a wallet controlled by Aave LLC. The order provides explicit legal cover for ArbitrumDAO participants: any party initiating, voting on, or participating in the onchain transfer to Aave LLC is not in violation of the restraining notice served by Gerstein Harrow LLP on May 1st.

The restraining notice transfers with the assets. Aave LLC has agreed to abide by the terms of the restraining notice as if it had been issued directly to Aave LLC, until the court vacates it, the plaintiffs withdraw it, or it expires by operation of law. The judge did not rule on whether the plaintiffs actually have a valid legal claim to the funds. The order helps move the DeFi United recovery effort forward towards restoring the backing of rsETH.

The ruling clears the legal path for the transfer authorized by ArbitrumDAO's recovery vote. The approval of the Mantle DAO loan to Aave and Aave's earlier liquidation of attacker rsETH positions brings DeFi United one phase closer to completion.

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Mantle DAO passed a governance proposal authorizing its treasury to lend up to 30,000 ETH to Aave DAO to address bad debt stemming from the April 18 KelpDAO LayerZero exploit. The vote closed with 100% approval. The loan carries a variable interest rate of the Lido staking yield plus 1% APR and a maturity of up to 36 months.

As collateral, Aave will allocate 5% of protocol revenue and AAVE tokens with a fair market value of no less than $11 million to a designated multisig over which Mantle holds a first-priority lien. Mantle will also be delegated 130,000 AAVE tokens for governance during the loan.

Interest generated on the loan may be directed toward MNT burns or ecosystem development, and the deal accelerates Aave's native deployment on Mantle Network, with Aave V3 Mantle carrying the largest estimated WETH market exposure among all markets impacted by the exploit. The Mantle Foundation will now finalize definitive agreements with Aave DAO.

The Mantle loan adds to a growing recovery effort that includes Aave's liquidations of attacker rsETH positions and ArbitrumDAO's approval of its own rsETH recovery contribution.

Disclaimer: Content is for informational and educational purposes only and does not constitute financial, investment, legal, or other professional advice. No representations or warranties are made as to accuracy, completeness, or timeliness. Use of this content is at your own risk, and you should consult a qualified professional before making decisions. No fiduciary or advisory relationship is created