Mantle Weighs 30,000 ETH Credit Facility to Cover Aave rsETH Exploit Fallout

TLDR:

• Mantle may lend Aave DAO up to 30,000 ETH after the rsETH bridge exploit on April 18.
• Attackers used 89,567 stolen rsETH on Aave V3 and borrowed assets worth nearly $190M.
• Aave must provide extra collateral, protocol revenue share, and AAVE tokens worth $11M.
• Mantle would gain 130,000 delegated AAVE tokens and first-priority lien protection.

Aave DAO may receive up to 30,000 ETH from Mantle Treasury after a new governance draft proposed emergency support for losses tied to the rsETH exploit. 

The draft, posted by Mantle Core contributors, targets bad debt created after attackers used stolen rsETH as collateral on Aave V3. 

Mantle said the facility would help stabilize Aave while creating yield from idle treasury assets. The proposal remains in pre-discussion stage and has not moved to a formal governance vote.

Mantle Proposes 30,000 ETH Loan for Aave DAO

The proposal follows the April 18 exploit involving Kelp DAO’s rsETH bridge.

According to Mantle’s draft, attackers minted 116,500 unauthorized rsETH worth about $292 million at the time. The issue came from a LayerZero bridge setup using a 1-of-1 DVN verifier structure.

That weakness allowed a single verifier to approve cross-chain messages without proper validation. The attacker then moved quickly across DeFi protocols.

Mantle said 89,567 rsETH entered Aave V3 as collateral after the exploit. The attacker borrowed real assets including WETH, wstETH, and stablecoins valued near $190 million.

The draft cited a LlamaRisk report estimating Aave’s potential bad debt between $123.7 million and $230.1 million. The final figure depends on how losses get distributed across the protocol.

Mantle Treasury would lend less than 30,000 ETH under the proposal. Aave DAO, through Aave Labs or another approved entity, would act as borrower.

The interest rate would track Lido yield plus 1% APR unless both sides finalize different terms. The maturity period could extend to 36 months.

Aave would also retain the right to repay early without penalties. Mantle described the structure as a yield-generating credit asset for treasury management.

Collateral Terms Aim to Reduce Treasury Risk

Mantle included several protections before releasing treasury funds.

All ETH under the loan would move to a multisig wallet selected by Mantle. The treasury would hold first-priority security rights over that wallet.

Aave would also contribute extra collateral through 5% of protocol revenue and AAVE tokens worth at least $11 million. Mantle would hold a signing key for the wallet or SAFE.

The proposal also lists standard default triggers such as missed payments, insolvency, or contract breaches. In those cases, the loan becomes immediately due.

Mantle would also receive delegation of 130,000 AAVE tokens for governance participation. That would allow voting access within the Aave community during the loan period.

Mantle said the deal supports broader strategic goals beyond the immediate credit line. These include stronger ties with Aave and deeper deployment of Aave on Mantle Network.

The draft argues that Aave’s presence could increase TVL and user activity across Mantle’s DeFi ecosystem. Treasury interest could also support future MNT burns or ecosystem funding.

Community members must now review loan duration, pricing, and risk exposure before the proposal advances. Mantle asked users to discuss terms and signal support before a Snapshot vote.

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