TLDR
- Extreme slippage on Aave led to a devastating loss of nearly $50 million for one cryptocurrency trader in a single swap transaction.
- The transaction converted $50.4 million into approximately 327 AAVE tokens valued at just $36,000.
- The trader acknowledged and bypassed several explicit slippage warnings on mobile before executing the trade.
- An MEV bot executed a sandwich attack on the same transaction, extracting close to $10 million in profits.
- The Aave protocol announced plans to refund approximately $600,000 in protocol fees to the impacted trader.
On Thursday, March 12, 2026, a cryptocurrency trader experienced one of the most devastating losses in DeFi history, losing approximately $50 million in just one transaction. The incident occurred while executing a token swap on Aave, a prominent decentralized finance platform.
The wallet in question, freshly funded via Binance, contained $50,432,688 worth of aEthUSDT. These interest-bearing tokens represent Tether’s USDT stablecoin deposited within the Aave lending ecosystem operating on Ethereum.
The trader initiated a swap to exchange the entire balance for aEthAAVE, the tokenized version of Aave’s governance token. This transaction was processed through CoW Protocol and executed on the SushiSwap decentralized exchange.
Due to the massive size of the order relative to available pool liquidity, the swap suffered catastrophic slippage exceeding 99%. The final result was a mere 327 AAVE tokens worth roughly $36,000.
Effectively, the trader paid approximately $154,000 for each AAVE token when the prevailing market rate stood at around $114.
What the Warnings Said
Stani Kulechov, founder of Aave, verified that the platform’s user interface had displayed prominent warnings before execution. In a post on X, he explained that the system alerted the user about “extraordinary slippage” resulting from the “unusually large size of the single order.”
The platform mandated that users check a confirmation box acknowledging the risk. The trader completed this step on a mobile device and moved forward with the transaction.
CoW DAO released its own statement, explaining that “no DEX, DEX aggregator, public liquidity pool, or private liquidity pool would have been able to fill this trade at anywhere near a reasonable price.”
The MEV Bot Attack
Compounding the slippage disaster, an MEV bot launched a sophisticated “sandwich attack” targeting this transaction.
MEV bots constantly scan pending blockchain transactions for profitable opportunities. This particular bot identified the massive incoming AAVE purchase and positioned itself to exploit it.
The bot secured a flash loan of $29 million in wrapped Ether from Morpho, deployed it to purchase AAVE on Bancor (artificially inflating the price), then sold directly into the trader’s order on SushiSwap. This strategy generated approximately $9.9 million in profits for the bot operator.
The manipulation drove AAVE’s price significantly higher immediately before the trader’s order executed, amplifying an already catastrophic outcome.
This incident followed closely after approximately $27 million in liquidations on Aave, which some observers suggested might have been connected to a temporary pricing anomaly affecting the wstETH token.
Kulechov expressed sympathy for the affected trader. The Aave protocol intends to contact the user and reimburse approximately $600,000 in fees collected during the transaction.
CoW DAO similarly committed to refunding any protocol fees associated with the trade.
The post DeFi Disaster: How Ignoring Slippage Warnings Cost One Trader $50 Million on Aave appeared first on Blockonomi.
Source: https://blockonomi.com/defi-disaster-how-ignoring-slippage-warnings-cost-one-trader-50-million-on-aave/
