Mantle Offers Aave 30K $ETH Loan Amid Kelp Exploit Fallout

Mantle Network has proposed lending up to 30,000 $ETH to Aave DAO to help it absorb bad debt resulting from a recent exploit. The proposal, MIP-34, was published by Mantle's Core Contributor Team on Thursday and outlines a strategic credit facility for Aave directed at resolving rsETH bad debt on Aave V3.

The loan would convert idle treasury funds into a yield-generating credit asset and strengthen cooperation between the two protocols. In return, Mantle Treasury would receive a yield on the loan with proceeds from interest going towards token burns or ecosystem funding.

Aave would need to deposit at least $11 million in Aave tokens as collateral and direct 5% of its revenue to a multisig wallet under Mantle's lien. The loan would have an indicative interest rate of Lido staking's annual percentage rate plus a 1% premium, subject to final negotiation.

Bybit CEO Ben Zhou has publicly backed the proposal, stating that when Bybit was hacked, the industry rallied to help and it is 'the only right thing' to do now. The exploit occurred on April 18, with an attacker minting 116,500 rsETH tokens valued at approximately $292 million through a security breach in Kelp DAO's LayerZero-powered cross-chain bridge.