The proposal would structure the funds as an interest-bearing loan with a term of up to 36 months and collateral requirements for Aave. The bad debt was created after attackers minted 116,500 rsETH through a compromised Kelp DAO bridge and used around $221 million of the stolen assets as collateral on Aave V3 to borrow WETH and wstETH. Mantle Offers 30,000 ETH to Help Aave Mantle Network, an Ethereum Layer 2 project backed by Bybit, proposed a major financial support package to help Aave DAO recover from the fallout of the recent $292 million Kelp DAO exploit. The proposal is known as MIP-34, and was submitted by Mantle’s Core Contributor Team. It will allow the Mantle Treasury to lend up to 30,000 ETH to Aave DAO. The funds would be used specifically to cover bad debt that was created on Aave V3 after the exploit involving rsETH, a liquid restaking token connected to Kelp DAO. Part of Mantle’s MIP-24 proposal According to the proposal, Mantle will not simply hand over the funds, but instead structure the arrangement as a yield-generating credit facility. Mantle Treasury would earn interest on the loan, turning otherwise idle assets into productive capital. The suggested interest rate would be based on Lido’s staking APR plus an additional 1% premium, though final terms would still need to be negotiated. The proposed maturity period is up to 36 months, and Aave would be able to repay the loan early without penalty. Mantle also shared details about several safeguards to reduce risk. The loan would be secured through a multisignature wallet designated by Mantle, where it would hold first-priority rights over the collateral. In addition, Aave would be required to commit 5% of its protocol revenue and AAVE tokens worth at least $11 million as collateral. If Aave defaults, Mantle would have the right to demand immediate repayment. Bybit CEO Ben Zhou publicly backed the proposal by saying the crypto industry should support one another during times of crisis. He referenced Bybit’s own past security incident, and pointed out that the community offered assistance then. The crisis began on April 18 when attackers exploited Kelp DAO’s LayerZero-powered cross-chain bridge. Around 116,500 rsETH tokens were fraudulently minted, worth roughly $292 million. This made it the largest decentralized finance exploit of the year so far. LayerZero said the attackers, likely linked to North Korea’s Lazarus Group, compromised two RPC nodes and used a DDoS attack to trick the bridge’s verification system into approving a fake message. The damage quickly spread to Aave when the attacker used approximately $221 million in stolen rsETH as collateral on Aave V3, borrowing 82,650 WETH and 821 wstETH. This left Aave facing a massive bad debt problem.
