TL;DR:
- Mantle tokenholders approved MIP-34, authorizing talks for a credit facility of up to 30,000 ETH for Aave DAO.
- The facility targets potential bad debt from the April rsETH exploit, estimated between $123.7 million and $230.1 million.
- Aave’s WETH market has cooled from extreme utilization, but final loan terms, the recovery plan and liquidity improvement remain the key next tests for market confidence across affected DeFi lenders and borrowers.
Mantle tokenholders approved MIP-34, authorizing the Mantle Foundation to negotiate a credit facility of up to 30,000 Ether for Aave DAO after the April rsETH exploit strained Aave V3 markets. The facility is worth about $68 million and is designed to support remediation of potential bad debt. A treasury backstop is now on the table, though the arrangement is not automatic. It remains subject to Aave implementing its recovery plan and both sides finalizing definitive terms after the seven-day Snapshot vote ended Friday, leaving the negotiation phase formally open for both communities to monitor.
Aave’s Recovery Enters a Negotiation Phase
The remediation target is stark. The attacker deposited 89,567 unbacked rsETH on Aave and borrowed about $190 million in WETH, wstETH and stablecoins, leaving potential bad debt estimated between $123.7 million and $230.1 million. The exploit turned collateral failure into lending-market stress, because the issue moved beyond one asset and into liquidity conditions around Aave’s core Ether-linked markets. For tokenholders, backing the facility means using Mantle Treasury resources to help contain damage while Aave works through its own recovery process under terms that still need to be finalized by parties.
The aftershock was visible in Aave’s WETH market. Galaxy Research said utilization stayed above 99% for 12.7 days after the incident, averaging around 99.6% and only easing to about 98.47% by the end of its snapshot period. Liquidity stayed trapped near full utilization, which matters because high utilization means most supplied assets are already borrowed and fewer funds remain available for immediate withdrawals. In practice, supply contracted faster than borrowing declined, keeping the market strained long after the first exploit shock had passed for lenders, borrowers and risk managers watching solvency signals in DeFi.
The market has cooled, but not fully normalized. Aavescan data showed Aave’s Ethereum V3 WETH market at about 91.6% utilization on Friday, with roughly 2.02 million WETH supplied and 1.85 million WETH borrowed. The next milestone is execution, not approval, because Mantle’s vote only opens the door to a negotiated facility. Aave’s recovery plan, final loan terms and continued liquidity improvement will determine whether the backstop becomes a credible confidence bridge or another complicated DeFi repair process for users still assessing protocol-level risk after the exploit this month.
