Mantle tokenholders have approved a proposal authorizing a credit facility of up to 30,000 Ether (ETH), valued at roughly $68 million, for Aave DAO as part of ongoing efforts to address bad debt stemming from the April rsETH exploit.
The proposal, known as MIP-34, passed following a seven-day Snapshot governance vote that concluded on Friday. Under the measure, the Mantle Foundation is permitted to negotiate and finalize agreements with Aave DAO for a loan backed by the Mantle Treasury. However, the facility will still depend on Aave implementing its recovery strategy and both parties agreeing on final terms.
The proposed credit line is designed to mitigate the damage caused by the rsETH exploit on Aave V3. According to the proposal, the attacker deposited 89,567 unbacked rsETH tokens into Aave before borrowing approximately $190 million worth of WETH, wstETH and stablecoins, leaving the protocol exposed to estimated bad debt ranging from $123.7 million to $230.1 million.
The approval marks a new stage in the aftermath of the rsETH exploit, shifting the focus from the immediate liquidity crisis toward long-term remediation efforts. Mantle is now positioning its treasury as a financial backstop while Aave works to repair its balance sheet and rebuild confidence in its lending ecosystem.
Aave’s WETH market remains strained after rsETH exploit
The proposed Mantle credit facility is aimed at covering the shortfall that also triggered significant liquidity pressure across Aave’s lending markets.
In a report published Thursday, Galaxy Research said the rsETH exploit pushed Aave’s Wrapped Ether (WETH) market into an extended liquidity squeeze, with WETH utilization remaining above 99% for nearly 12.7 days following the incident.
According to Galaxy, WETH utilization stayed persistently elevated throughout the analysis period, averaging roughly 99.6% and only easing to around 98.47% toward the end of the observed timeframe.
Such high utilization levels indicate that nearly all supplied WETH had already been borrowed, leaving minimal idle liquidity available for withdrawals. Galaxy noted that the strain persisted because WETH supply on Aave declined faster than outstanding borrows, keeping utilization rates near maximum capacity even after the initial market shock subsided.
Conditions in Aave’s WETH market have since eased from the near-100% utilization levels highlighted in Galaxy’s report. Data from Aavescan showed that Aave’s Ethereum V3 WETH market was operating at roughly 91.6% utilization on Friday, with around 2.02 million WETH supplied and approximately 1.85 million WETH borrowed.
