Mantle DAO passed a governance proposal authorizing its treasury to lend up to 30,000 ETH to Aave DAO to address bad debt stemming from the April 18 KelpDAO LayerZero exploit. The vote closed with 100% approval. The loan carries a variable interest rate of the Lido staking yield plus 1% APR and a maturity of up to 36 months.

As collateral, Aave will allocate 5% of protocol revenue and AAVE tokens with a fair market value of no less than $11 million to a designated multisig over which Mantle holds a first-priority lien. Mantle will also be delegated 130,000 AAVE tokens for governance during the loan.

Interest generated on the loan may be directed toward MNT burns or ecosystem development, and the deal accelerates Aave's native deployment on Mantle Network, with Aave V3 Mantle carrying the largest estimated WETH market exposure among all markets impacted by the exploit. The Mantle Foundation will now finalize definitive agreements with Aave DAO.

The Mantle loan adds to a growing recovery effort that includes Aave's liquidations of attacker rsETH positions and ArbitrumDAO's approval of its own rsETH recovery contribution.

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Mantle, an Ethereum L2, published a governance proposal offering a loan of up to 30,000 ETH to Aave DAO to help address bad debt from the KelpDAO LayerZero exploit. The loan would carry a variable interest rate of the Lido staking yield rate plus 1% APR, with a maturity of up to 36 months and early repayment permitted without penalty.

The loan allows the Mantle Treasury to receive yield to generate a positive risk-adjusted return on unallocated treasury assets, with proceeds directed toward MNT burns or ecosystem funding. Mantle would also be delegated 130,000 AAVE tokens for governance participation during the loan period. The proposal is currently open for community discussion ahead of a formal Snapshot vote. The Aave v3 Mantle WETH market currently faces the largest estimated bad debt among all impacted markets.

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