Mantle Proposes 30,000 ETH Loan to Aave After Kelp Hack
Mantle Network has proposed MIP-34: a 30,000 ETH loan to Aave DAO to help absorb bad debt created after the $292M Kelp DAO exploit. The facility is yield-bearing and designed to address rsETH-related losses in Aave V3. The loan can run up to 36 months, and Aave can repay early without penalty.
Latest details confirm the attack flow: attackers minted 116,500 rsETH via a compromised Kelp DAO bridge, used about $221M of the stolen rsETH as collateral on Aave V3, then borrowed 82,650 WETH and 821 wstETH—leaving Aave exposed to major bad debt. Mantle’s pricing uses Lido staking APR plus a 1% premium (final rate to be negotiated).
Risk controls for Aave include: collateral held in a Mantle-chosen multisig wallet with Mantle first-priority rights, Aave posting at least $11M worth of AAVE tokens, Aave committing 5% of protocol revenue, and immediate repayment rights if Aave defaults. Bybit CEO Ben Zhou has publicly supported the move, framing it as industry cooperation after cross-chain security failures.
For traders, this is a practical DeFi credit-repair mechanism around Aave, which may reduce near-term tail-risk fears. However, the market will still watch Aave’s collateral quality and the broader cross-chain contagion narrative for any sentiment swings.
Neutral
Bullish is limited because this is a rescue proposal, not a direct improvement to Aave’s on-chain fundamentals. Still, it is also not purely bearish: the structured collateral, revenue contribution, and immediate repayment clause are designed to cap losses and contain DeFi contagion after the Kelp/rsETH incident. In the short term, traders may rotate cautiously toward Aave-related risk if the market believes the facility reduces bad-debt uncertainty. In the long term, sentiment hinges on execution—whether the multisig collateral and AAVE token safeguards remain sufficient and whether other counterparties tighten risk controls following cross-chain failures.