Mantle Proposes 30,000 ETH Loan to Aave for Kelp Exploit Debt

Mantle, an Ethereum Layer 2 network backed by Bybit, has proposed lending up to 30,000 ETH from its treasury to Aave DAO to address bad debt stemming from last week's Kelp DAO exploit. The initiative, detailed in a governance proposal published Thursday by the Mantle Core Contributor Team, aims to provide targeted liquidity support exclusively for resolving losses on Aave's V3 platform.

The proposal, known as MIP-34, outlines a structured credit facility with safeguards to protect Mantle's funds. The loan would carry an interest rate tied to Lido's staking annual percentage rate plus a 1 percent premium, subject to final negotiations, and mature in up to 36 months. Aave could repay early without penalty. To secure the funds, Aave would deposit them into a multisig wallet controlled by Mantle, which would hold a first-priority lien. Additional collateral includes 5 percent of Aave's protocol revenue and at least 11 million worth of AAVE tokens. In the event of default, the loan would become immediately due. Mantle would also receive delegation of 130,000 AAVE tokens, granting it voting rights in Aave's governance during the loan term.

Mantle officials described the move as a way...