Hassan Maishera
TL;DR
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Mantle Network proposed a loan of up to 30,000 ETH to Aave DAO to help resolve bad debt from the $292 million Kelp DAO exploit.
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The loan aims to convert idle funds into yield-generating assets, strengthening Mantle’s relationship with Aave.
Mantle Proposes Up to 30,000 ETH Loan to Address Aave Bad Debt
Bybit-backed Ethereum Layer 2 network Mantle has proposed a loan of up to 30,000 ETH to Aave DAO to help the protocol manage bad debt from the $292 million exploit of Kelp DAO's LayerZero-powered cross-chain bridge last week.
On Thursday, Mantle’s Core Contributor Team introduced MIP-34, a proposal outlining a strategic credit facility for Aave DAO to address the rsETH exploit.
If approved, the proposal would authorize Mantle Treasury to lend up to 30,000 ETH to Aave DAO for the exclusive purpose of resolving the bad debt caused by the exploit in Aave V3. Mantle Treasury would earn a yield on the loan.
The proposal emphasizes that the loan would convert idle treasury funds into a yield-generating credit asset, strengthening the relationship between Mantle and Aave. The loan would also boost Aave's deployment on the Mantle Network. Proceeds from loan interest would be used for Mantle token burns or ecosystem funding.
The proposal added that the loan’s interest rate would be based on Lido staking APR plus a 1% premium, with a maturity period of up to 36 months. The loan is secured via a multisig wallet with a first-priority lien, and collateral requirements include 5% of Aave’s revenue and Aave tokens worth at least $11 million. Early repayment is allowed without penalty.
Bybit CEO Ben Zhou expressed his support for the proposal, emphasizing that the crypto industry should unite in tough times just as it did when Bybit was hacked.
This latest development comes following the April 18 hack of Kelp DAO’s cross-chain bridge, which led to the unauthorized minting of 116,500 rsETH tokens, valued at $292 million. The attacker used stolen funds to create significant bad debt for Aave, which has been actively seeking relief from the wider DeFi community, including contributions from Arbitrum, Lido Labs, and the EtherFi Foundation.
The hacker has already laundered roughly $80 million worth of Ethereum, according to blockchain analytics firm EmberCN, intensifying scrutiny on cross-chain liquidity routes and non-custodial swap protocols.
