Mantle, a modular layer 2 blockchain on Ethereum with deep ties to Bybit, has proposed to deploy up to 30,000 ETH from its treasury as a credit facility to Aave DAO in response to losses caused by the rsETH exploit.

The loan would be strictly allocated to covering the shortfall on Aave V3, with Mantle seeking to convert idle treasury capital into a yield-generating position while supporting recovery efforts.

The incident originated from a security breach in Kelp DAO’s rsETH bridge, where attackers exploited a misconfigured verification system to mint over 116,000 tokens. A portion of these unbacked assets was deposited into Aave and used to borrow roughly $190 million, resulting in considerable potential bad debt.

Under the proposed terms, the loan would carry an interest rate of around Lido yield plus 1%, with a maturity of up to 36 months and optional early repayment. Risk mitigation measures include collateral held in a multisig wallet, additional backing from Aave protocol revenue and tokens, default protections, and governance participation through delegated AAVE tokens.