Aave proposes 25,000 ETH to compensate Kelp DAO victims

Aave has submitted an on-chain governance proposal asking AAVE token holders to approve a transfer of 25,000 ETH to DeFi United so the group can reimburse victims of a recent Kelp DAO smart-contract exploit.

The proposal specifies the funds are intended to offset losses Kelp DAO suffered after an attacker exploited vulnerabilities in the DAO’s contracts. It directs that DeFi United receive the ETH for distribution to affected addresses under the recovery plan the group has outlined.

Kelp DAO reported that an attacker drained funds from user wallets and the DAO treasury. The proposal does not state the total amount of losses tied to the exploit; it focuses on the requested contribution amount and the mechanism for transferring the ETH if the community approves the measure.

If the proposal passes, the transfer will be carried out through Aave’s governance-controlled treasury processes and follow DeFi United’s distribution framework. The proposal asks DeFi United to provide a timeline for distribution and regular reports on how it allocates the funds to affected parties.

Aave is a decentralized lending protocol governed by AAVE token holders. Major financial decisions involving community-controlled reserves or the protocol treasury require a governance vote. Aave has previously used proposals to direct funds for grants, integrations and emergency responses.

DeFi United has coordinated response and recovery efforts for the Kelp DAO incident, working with security firms and recovery coordinators to manage compensation. The result of the Aave vote will determine whether the 25,000 ETH is transferred and how quickly reimbursements reach Kelp DAO stakeholders.