- Mantle proposed lending up to 30,000 ETH to Aave DAO
- The loan would help cover bad debt from the Kelp DAO exploit
- Mantle would earn yield on the loan
- The proposal is part of a wider DeFi recovery effort
Mantle Steps In After Major DeFi Exploit
Mantle has proposed a loan of up to 30,000 ETH to Aave DAO to help address bad debt caused by the Kelp DAO exploit.
The proposal would allow Mantle Treasury to lend ETH specifically for resolving losses tied to rsETH on Aave V3.
How the Loan Would Work
If approved, the loan would generate yield for Mantle while helping Aave manage the fallout from the exploit.
The proposed interest rate would be based on Lido staking returns plus an extra premium. Aave would also need to provide collateral, including revenue and AAVE tokens.
Why Aave Was Affected
The Kelp exploit led to the unauthorized minting of rsETH. The attacker then used stolen rsETH as collateral on Aave to borrow large amounts of ETH-related assets, creating bad debt for the lending protocol.
DeFi Groups Rally Around Recovery
Mantle’s proposal follows other recovery efforts from major DeFi players, including Arbitrum, Lido, EtherFi, Golem, and Frax.
The situation shows how connected DeFi protocols can be, and how one exploit can quickly spread across the ecosystem.
