Aave (AAVE) Pushes Proposal to Release $73M in Frozen Arbitrum Funds – Here’s What Could Change for DeFi Users
There’s a pretty big situation unfolding around Aave right now, and it ties back to a recent exploit that shook part of the DeFi space. Aave Labs is asking the Arbitrum community to release a chunk of frozen funds, about $73.5 million worth of ETH that were locked after the Kelp DAO incident.
The issue started with Kelp DAO and its rSETH token. A glitch in the bridge system allowed a large amount of rSETH to be released without proper backing. That left a hole of over 76,000 tokens, and from there, things started to ripple across multiple platforms. One of the biggest impacts landed on Aave, where the exploiter had already used rSETH as collateral to borrow a lot of funds.
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The Plan to Fix It and Why It Matters
So what’s the solution? Aave isn’t just asking for the funds to be unlocked, they want them redirected into a recovery plan called “DeFi United.” The goal is to use those assets to restore the backing of rSETH and help users who were affected by the exploit.
This isn’t a one-project effort either. Names like LayerZero, Compound, and Ether.fi are all on board. The idea is to stabilize things across the ecosystem and rebuild some trust after the damage, as shared by TheCryptoBasic.
#Aave Proposes Release of Frozen Kelp DAO Funds.
— TheCryptoBasic (@thecryptobasic) April 27, 2026
Aave Labs has formally appealed to the Arbitrum community to unfreeze funds tied to the Kelp DAO exploit.
The proposal requests the release and redirection of approximately $73.5 million in ETH from a larger frozen pool of around… pic.twitter.com/tlrKg2tQTi
For Aave, this move also helps clean up risk on its own platform. The exploiter had deposited a large amount of rSETH and borrowed heavily against it. Fixing the backing issue would reduce that stress and make things safer for users on its Arbitrum market.
At this point, the funds are already locked and safe. The only thing left is for governance to decide whether they should be released and used for this recovery effort.
Read Also: Crypto Price Prediction for Today, April 27: Jupiter (JUP), XRP, Aave (AAVE)
AAVE Price Outlook
We had a look at the latest price action, and the AAVE price is currently around $95.63. It’s been moving in a tight range, and volume is pretty low. That usually means traders aren’t rushing in either direction yet.
One key level stands out, the 100-period SMA at $97.74. The AAVE price has been struggling to get back above it, and every attempt has been pushed down. Until that changes, the short-term outlook stays a bit weak.
On the downside, support is right around $95.60. If that level breaks, the price could move toward $92 and possibly $88. On the upside, getting back above $97.74 would be the first sign of strength, with $100 and $104 as the next areas to watch.
A Turning Point for DeFi Coordination and Trust
Even though things look slow, there are a few hints that the selling pressure might be easing. The RSI is around neutral and has shown a few bullish divergence signals. That usually means the downside move is losing steam, even if the price hasn’t reacted yet.
At the same time, the volume is still light and candles are small. That kind of setup doesn’t last forever. When price tightens like this, a stronger move usually follows.
Right now, the AAVE price is stuck between resistance above and support below. A push above $97.74 could change the tone quickly. If $95.60 breaks, then the downside comes back into play. Either way, the next move could be important, especially with this recovery proposal in the background.
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