Mantle Proposes 30,000 ETH Loan to Help Aave After $292M KelpDAO Exploit

Highlights:

• Mantle proposed lending up to 30,000 ETH to Aave after the rsETH exploit.
• The attacker used fake rsETH collateral to borrow around $190 million in real assets.
• Bybit CEO Ben Zhou backed the plan, saying crypto firms should support each other.

A major exploit shook the DeFi world last week. A hacker drained hundreds of millions of dollars from a KelpDAO’s bridge, and Aave is now sitting on a massive pile of bad debt as a result. Mantle wants to help fix that.

Mantle’s core contributor team published a pre-governance proposal on Friday, called MIP-34. It asks the Mantle Treasury to lend up to 30,000 ETH to Aave DAO to cover the financial damage caused by the rsETH bridge exploit. The proposal is still in the discussion phase and has not gone to a formal community vote yet.

Following this week's rsETH incident involving @KelpDAO and @LayerZero_Core, a proposal has been put forward for Mantle to contribute a loan facility to @aave's coordinated relief effort.

The loan would form part of a wider coordinated framework, structured to minimize…

— Mantle (@Mantle_Official) April 24, 2026

KelpDAO Bridge Exploit Leaves Aave with Heavy Bad Debt

On April 18, an attacker spotted a critical weakness in the bridge that KelpDAO used for its rsETH token. The bridge ran on LayerZero, a cross-chain messaging protocol. The attacker targeted what the proposal calls a “1-of-1 DVN” setup, a configuration where only one verifier needed to approve cross-chain messages. That single point of failure gave the attacker everything they needed.

By exploiting that gap, the attacker minted 116,500 rsETH tokens out of thin air. Those tokens had no real backing behind them. At the time of the attack, they carried a market value of roughly $292 million.

The attacker then took 89,567 of those fake rsETH tokens and deposited them as collateral on Aave V3, one of DeFi’s biggest lending platforms. Using those worthless tokens, the attacker borrowed real assets such as WETH, wstETH, and stablecoins, totaling around $190 million. 

Since the collateral behind those loans is fake, Aave is now holding bad debt that it cannot easily recover. A LlamaRisk report cited in Mantle’s proposal puts the total loss somewhere between $123.7 million and $230.1 million, depending on how the protocol handles the situation going forward.

Aave DAO and its service providers have been working on a recovery plan since the incident. Several parties have already offered early commitments to help. Mantle’s proposal is one of those contributions.

Mantle Sets Loan Terms with Safety Backing

Under MIP-34, Mantle Treasury would provide up to 30,000 ETH to Aave DAO as a structured loan. The interest rate would be the Lido staking rate plus 1% per year. Aave would have up to 36 months to repay the loan, but it could also repay it early without any penalty.

Mantle has also added safety measures to the plan. The ETH would be kept in a multisig wallet, where Mantle would have the first claim on the funds. Aave would provide extra backing through 5% of its protocol revenue and at least $11 million worth of AAVE tokens. Mantle would also receive 130,000 delegated AAVE tokens, giving it a stronger voice in Aave’s governance during the loan period.

Bybit CEO Ben Zhou also supported the proposal on X the same day. He said Bybit would vote in favor because it is Mantle’s largest holder and supporter. Zhou also linked the move to Bybit’s own past crisis. He said the crypto industry helped Bybit during a difficult time, so it is right for major players to support each other when similar problems happen.

Bybit, as the biggest holder and supporter of Mantle, will vote YES for this proposal. When we got hacked the industry got together and helped us. It is the only right thing that we do the same to unit together and walk out from difficult times. https://t.co/GmAK4YwLns

— Ben Zhou (@benbybit) April 24, 2026