@arbitrum: Security Council freezes 30,766 ETH from KelpDAO exploiter

@arbitrum: Security Council freezes 30,766 ETH from KelpDAO exploiter
by timdaub.eth12383 🥝 • 6mo • x.com
AI summary of the linked article

The Arbitrum Security Council has frozen 30,766 ETH held on Arbitrum One at an address connected to the KelpDAO exploit. The Security Council acted with input from law enforcement on the exploiter's identity, and says it did so without affecting any Arbitrum users or applications. As of April 20 at 11:26pm ET, the funds had been transferred to an intermediary frozen wallet and can only be moved through further Arbitrum governance action, coordinated with relevant parties.

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Someone wrote: „I guess we now know that L2s are not decentralized“
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It brings to mind the Gnosis hard fork after the Balancer hack. Decentralized systems are built for humans (and broken by humans). Code is law until humans decide it shouldn't be. Not a failure of decentralization, but accountability working as intended. Unaccountable DeFi just becomes shadow TradFi with worse UX. Still, the real question is who gets to pull the lever, and how to keep it neutral and transparent. The honest answer: there's no perfectly neutral lever, only legitimate ways of pulling it.

With Gnosis, legitimacy came from ‘right of exit’: users could always withdraw or fork. The ultimate check, as Gnosis proved. Neutrality isn't a property of the lever; it's a property of the process around it.

Arbitrum freezing the ETH from the KelpDAO exploiter was arguably the right call, but there's no exit. If you're on Arbitrum, you're subject to the council's discretion. Legitimacy is borrowed from the outcome (stopping a thief), not the process (user consent).

Gnosis: consent-based. Arbitrum: trust-based. Consent scales; trust doesn't. That's the discussion we need to have.
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