Mantle Tokenholders Back Aave Credit Facility After rsETH Exploitation

Mantle tokenholders have backed a proposal that would allow up to 30,000 Ether (ETH) worth of a $68 million credit facility for Ave Dao, a bad debt restructuring from April's rETH exploit.

The proposal was passed by MIP-34 in a seven-day instant vote that ended on Friday, according to a screenshot of the DAO governance forum. The measure allows the Mantle Foundation to negotiate and execute critical agreements with Ave DAO to obtain a loan from the Mantle Treasury.

The credit facility is intended to address the impact of the rsETH event on Aave V3. The proposal states that the attacker deposited 89,567 unbacked rETH on Aave and borrowed $190 million in WETH, wstETH, and stablecoins, creating a bad debt estimated between $123.7 million and $230.1 million.

The vote comes as Mantle positions the Treasury as a backstop as it moves from the first liquidity shock after the collapse of rsETH mining to a broader resolution phase as Ave works to resolve bad debt and restore confidence in its credit markets.

Source: Ave

Aave WETH market freezes after post-exploitation squeeze

The Mantle Credit Facility will address the liquidity stressors in the Aave credit markets.

Galaxy Research said in a report on Thursday that the rsETH exploit pushed Aave's Wrapped Ether (WETH) market into a prolonged squeeze, with WETH usage exceeding 99% for 12.7 days after the event.

“Across the full analysis horizon, WETH utilization is structurally high and close to the 100% ceiling, averaging around 99.6% and easing to around 98.47% at the end of the snapshot,” Galaxy said.

Related: Aave Asks Arbitrum to Send 30K ETH from Kelp Mining to ‘DeFi United'

High utilization means that most of the property on offer is pre-mortgaged, making it available immediately to let out with little idleness. In Aave's case, Galaxy said the WETH market remained under stress because supply declined faster than credit, holding usage to full capacity even after the initial shock.

30-Day WETH Usage Rate Chart. Source: Avescan

The market has since cooled to nearly 100% of the levels indicated by Galaxy Analysis. Aavescan data showed that Aave's Ethereum V3 WETH market was 91.6% utilized on Friday, with 2.02 million WETH supplied and 1.85 million WETH borrowed.

Magazine: North Korea Denies Crypto Hacking, Appbit Bank Investigates Ripple: Asia Express