The proposal said the arrangement "demonstrates active treasury management and a proactive stance on industry resilience,
Ethereum News
Bybit-backed Ethereum layer-2 network Mantle has published a governance proposal to lend up to 30,000 $ETH to Aave DAO to help the protocol absorb bad debt stemming from last week’s $292 million Kelp DAO exploit.
The Mantle Core Contributor Team published the proposal, designated MIP-34, on Thursday, outlining a strategic credit facility for Aave DAO directed exclusively at resolving the rsETH bad debt on Aave V3. Mantle Treasury would receive a yield on the loan, with proceeds from loan interest directed to the treasury for $MNT token burns or ecosystem funding. The proposal said the arrangement "demonstrates active treasury management and a proactive stance on industry resilience, reinforcing token holder confidence in Mantle's long-term stewardship."
The proposal outlines an indicative interest rate of the Lido staking annual percentage rate plus a 1% premium, subject to final negotiation, with a maturity of up to 36 months and no early repayment penalty. As collateral, Aave would need to deposit Aave tokens worth at least $11 million and direct 5% of its revenue to a multisig wallet under Mantle's first-priority lien. In the event of a default, the loan would become immediately due and payable.
The Mantle team said the loan would convert idle treasury funds into a yield-generating credit asset and strengthen cooperation with Aave, including accelerating Aave's deployment on Mantle Network. Bybit CEO Ben Zhou publicly backed the proposal following its submission, writing that when Bybit was hacked, the industry rallied to help, and that it is "the only right thing" to do the same now. Bybit is a major strategic partner of Mantle Network.
The exploit itself occurred on April 18, when a security breach in Kelp DAO's LayerZero-powered cross-chain bridge led to the unauthorized minting of 116,500 rsETH tokens valued at approximately $292 million, the largest DeFi exploit of the year so far. LayerZero reported that the attacker poisoned two RPC nodes on Kelp DAO and launched a DDoS attack that caused the decentralized verifier network to accept a fraudulent cross-chain message and sign an illegitimate transaction.
The attack spread to Aave when the exploiter supplied around $221 million in stolen rsETH as collateral on Aave V3 to borrow 82,650 wrapped $ETH and 821 wstETH, creating significant bad debt for the protocol. An Aave incident review published earlier this week projected two scenarios that place total bad debt at approximately $124 million or $230 million, respectively. On-chain analysts reported Thursday that the attacker has since swapped $175 million in stolen $ETH into $BTC through THORChain and other venues.
Several DeFi players have rallied around "DeFi United," Aave's relief initiative to address the rsETH fallout. The EtherFi Foundation and Aave founder Stani Kulechov have each pledged 5,000 $ETH to the effort, while the Golem Foundation confirmed a contribution of 1,000 $ETH. Frax Finance announced it is working on its own contribution.
The Arbitrum Security Council earlier froze 30,766 $ETH held in an Arbitrum One address linked to the exploiter, and Lido Labs posted a separate proposal to allocate up to 2,500 staked $ETH to reduce the overall rsETH shortfall, which would indirectly shrink Aave's exposure to bad debt.
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