Mantle Offers 30,000 ETH to Aave DAO to Address Bad Debt

Mantle, a layer 2 blockchain connected to Bybit, has proposed deploying up to 30,000 ETH from its treasury as a credit facility to Aave DAO. This move aims to address losses stemming from the rsETH exploit.

The loan is intended to cover a shortfall on Aave V3, allowing Mantle to utilize idle treasury capital for yield generation while supporting Aave's recovery efforts.

The incident occurred due to a security breach in Kelp DAO’s rsETH bridge, where attackers minted over 116,000 unbacked tokens. A portion of these assets was deposited into Aave, leading to approximately $190 million in potential bad debt.

Under the proposal, the loan would carry an interest rate of Lido yield plus 1%, with a 36-month maturity. Risk mitigation includes collateral in a multisig wallet, Aave protocol revenue backing, and governance participation via delegated AAVE tokens.