According to DAO governance platform Snapshot, Mantle token holders have supported authorizing Aave DAO with a credit line of up to 30,000 ETH (approximately $68 million) to advance a scheme to compensate for bad debts related to the April rsETH attack.
The proposal MIP-34 passed in a seven-day snapshot vote that concluded on Friday. The measure authorizes the Mantle Foundation and the Aave DAO to negotiate and sign a final agreement on a loan from the Mantle Treasury, but the credit line still requires Aave to implement its recovery plan and for the terms to be finalized by both parties.
This credit line aims to help address the impact of the rsETH incident on Aave V3. The proposal states that the attacker deposited 89,567 uncollateralized rsETH on Aave and borrowed approximately $190 million worth of WETH, wstETH, and stablecoins, resulting in estimated bad debts between $123.7 million and $230.1 million.
This vote comes as the impact of the rsETH attack has shifted from an initial liquidity shock to a broader remediation phase. Mantle has positioned its treasury as a backing force, while Aave is focusing on addressing bad debt and restoring confidence in its lending markets.
Source: Aave
Aave's WETH market retreated after the post-attack squeeze eased.
Mantle's credit line will fill this gap, which in turn puts liquidity pressure on Aave's lending market.
In a report released Thursday, Galaxy Research stated that the rsETH attack pushed Aave's Wrapped Ether (WETH) market into a state of continuous squeeze, with WETH utilization remaining above 99% for 12.7 days after the incident.
“Throughout the analysis period, WETH utilization remained structurally high, close to the 100% cap, averaging around 99.6%, and only dropped back to around 98.47% by the end of the snapshot period,” Galaxy said.
High utilization rates mean that most of the supplied assets have already been lent out, leaving little idle liquidity available for immediate withdrawal. Galaxy stated that, in the case of Aave, the WETH market continues to be under pressure because supply is contracting faster than borrowing is declining, and even after the initial shock, utilization rates remain near full capacity.
30-day WETH utilization chart. Source: Aavescan
Since then, the market has fallen back from the near 100% level described in the Galaxy analysis. Aavescan data shows that as of Friday, the WETH market utilization rate on Aave Ethereum V3 was approximately 91.6%, with a supply of approximately 2.02 million WETH and a loan of approximately 1.85 million WETH.
