Mantle offers 30,000 ETH loan to help Aave cover Kelp DAO losses
Mantle Network has proposed lending up to 30,000 ETH to the Aave DAO. The move aims to help the leading DeFi lending protocol resolve bad debt resulting from last week’s $292 million exploit of Kelp DAO.
Highlights
- Mantle proposed a loan of up to 30,000 ETH to Aave DAO to cover bad debt from the Kelp DAO exploit.
- The loan is backed by at least $11 million in AAVE tokens and 5% of Aave’s revenue.
- Interest rate set at Lido deposit rate +1%, with a maximum 36-month term.
Details of the proposal
In governance proposal MIP-34 published on Thursday, the Mantle Core Contributor Team outlined a strategic credit facility. If approved, Mantle’s treasury would provide Aave with a loan of up to 30,000 ETH, to be used exclusively for clearing problematic rsETH positions on Aave V3.
The loan would carry an interest rate based on Lido’s deposit rate plus a 1% premium, with a maximum term of 36 months and no prepayment penalties.
For Mantle, the proposal is not a donation. It is structured as a secured loan. Mantle would receive a first-priority claim on a designated multisig wallet, while Aave would be required to post 5% of protocol revenue and at least $11 million worth of AAVE tokens as collateral. If Aave defaults, the loan would become immediately payable.
Industry support and motivation
Bybit CEO Ben Zhou publicly backed the initiative, stating: “When we were hacked, the industry came together to help us. The right thing to do is to unite and get through tough times together.”
Mantle noted that the credit would convert idle treasury assets into a yield-generating position while strengthening its partnership with Aave and accelerating the protocol’s deployment on the Mantle network.
Significance for DeFi
The proposal highlights a growing willingness within the DeFi ecosystem to collaborate and provide structured support following major security incidents.
Instead of leaving protocols to manage losses independently, participants are exploring collective solutions to maintain stability and restore user confidence.
We have previously highlighted that Arbitrum locks more than 30,000 ETH stolen from Kelp DAO.
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