Massive Loss from Crypto Trade
A cryptocurrency user faced a staggering loss of nearly $50 million in a single transaction on Thursday, following a large token swap that resulted in significant slippage.
Blockchain data shows that the wallet attempted to swap $50,432,688 worth of aEthUSDT—an interest-bearing token tied to Tether’s USDT stablecoin deposited in the Aave decentralized lending protocol— for aEthAAVE, a version of the Aave governance token, using the CoW protocol.
Due to inadequate liquidity in the trading pool, this transaction suffered over 99% slippage, ultimately leaving the wallet with only about 327 aEthAAVE tokens, worth around $36,000 after the trade was executed. The disparity in value was quickly exploited by arbitrage traders and intermediaries within the network.
In decentralized finance (DeFi), significant losses can arise when traders make large orders against shallow liquidity pools, leading to slippage. Automated arbitrage systems tend to capitalize on the price fluctuations these trades create.
Stani Kulechov, the founder of Aave Protocol, noted that the transaction went through despite multiple warnings to users before they confirmed it.
“Earlier today, a user attempted to buy AAVE with $50 million USDT through the Aave interface,” Kulechov said. “Considering the unusually large size of this order, the interface alerted the user about the potential delay and requested confirmation via a checkbox.”
Kulechov mentioned that users accepted the warning on their devices and moved forward with the trade, being aware of the high slippage risks involved.
“The transaction couldn’t proceed unless users explicitly accepted the risk,” he stated, adding that the CoW Swap router functioned properly according to industry standards.
Nonetheless, Kulechov remarked that the outcome was “clearly far from optimal.”
Aave plans to reach out to the impacted users and refund around $600,000 in transaction fees.
This incident follows closely on the heels of a prior liquidation of approximately $27 million on Aave, with some traders suggesting it could be linked to a temporary pricing issue with the token wstETH.
