Mantle published proposal MIP-34 to grant a loan of up to 30,000 ETH to Aave DAO, aimed at absorbing the bad debt generated by the Kelp DAO exploit last week. The hack, valued at $292 million, affected the rsETH token and left Aave V3 exposed to a debt the protocol cannot cover on its own.
According to the terms of the proposal, funds from Mantle’s treasury would be used exclusively to resolve that debt on Aave V3. The loan would carry an indicative rate equivalent to Lido’s staking APR plus a 1% premium, with a maximum term of 36 months and the possibility of early repayment without penalty.
As collateral, Aave must deposit 5% of its revenue and tokens worth at least $11 million into a multisig wallet controlled by Mantle, which will retain a right of preference over those assets. In the event of default, the debt becomes immediately enforceable.
The Mantle team argued that the arrangement converts idle treasury funds into a yield-generating asset and accelerates Aave’s deployment on its network. The interest earned would be directed toward MNT token burns or ecosystem funding.
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