Last updated on May 12th, 2026 at 03:00 pm
A Bybit-backed Ethereum Layer 2 network, Mantle Network, has stepped forward with a bold proposal to help stabilize Aave following the massive fallout from the Kelp DAO exploit.
In a proposal tagged MIP-34, Mantle’s core contributors outlined a plan to lend up to 30,000 ETH from its treasury to Aave DAO. The funds would be used strictly to offset bad debt tied to the compromised rsETH positions on Aave V3, a move aimed at preventing deeper systemic strain across decentralized finance.
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
Strategic loan to stabilize Aave
According to the proposal, the loan would transform idle treasury reserves into a yield-generating asset while reinforcing ties between both ecosystems. Mantle expects to earn interest based on Lido’s staking APR, plus an additional 1% premium, with repayment terms extending up to 36 months.
To reduce risk, the loan would be secured through a multisig wallet under Mantle’s control. Aave would be required to commit 5% of its revenue, alongside at least $11 million worth of tokens as collateral. In the event of default, Mantle would have immediate repayment rights.
Backing the move, Ben Zhou emphasized the importance of industry solidarity, noting that collective action during crises is essential for long-term resilience.
Exploit fallout sparks “DeFi United” response
The proposal comes in response to a $292 million exploit at Kelp DAO, triggered by a breach in its LayerZero-powered bridge. LayerZero reported that the attacker, likely North Korea’s Lazarus Group, exploited Kelp DAO by poisoning two RPC nodes and using a DDoS attack to force the Decentralized Verifier Network (DVN) to sign a fraudulent cross-chain transaction. Attackers minted over 116,000 rsETH tokens and later used them as collateral on Aave to borrow significant assets, leaving the protocol exposed to hundreds of millions in potential bad debt.
The ripple effects have mobilized a wide coalition of DeFi players under the “DeFi United” initiative. Contributions have already been pledged by Stani Kulechov, EtherFi Foundation, and others, while Arbitrum Security Council has frozen a portion of the attacker’s funds.
Enjoyed this piece? Bookmark DeFi Planet, explore related topics, and follow us on Twitter, LinkedIn, Facebook, Instagram, Threads, and Coin MarketCap Community for seamless access to high-quality industry insights.
“Take control of your crypto portfolio with DeFi Planet PRO, DeFi Planet’s suite of analytics tools.”
