A cryptocurrency user lost approximately $50 million in a single transaction on Thursday after executing a large token swap that caused a massive slide.
Blockchain data shows that the wallet attempted to exchange $50,432,688 aEthUSDT (an interest-bearing token representing Tether’s USDT stablecoin deposited on the Aave decentralized lending protocol on the Ethereum network) for aEthAAVE (a similar version of Aave governance tokens) via the CoW protocol.
The transaction was executed with a slippage of over 99% due to low liquidity in the relevant trading pools, leaving the wallet with only around 327 aEthAAVE tokens, worth approximately $36,000 after the transaction. The difference in value was quickly captured by arbitrage traders and network brokers.
Large losses caused by slippages occasionally occur in decentralized finance (DeFi) when traders attempt to execute unusually large orders against shallow liquidity pools. In such cases, automated arbitrage systems quickly exploit price dislocations created by trading.
Stani Kulechov, founder of the Aave protocol, said that the transaction was made despite multiple warnings presented to the user before confirming the transaction.
“Earlier today, a user attempted to purchase AAVE using $50 million USDT through the Aave interface,” Kulechov said in an X post. “Given the unusually large size of the single order, the interface warned the user about extraordinary slippage and required confirmation via a checkbox.”
According to Kulechov, the user accepted the warning on his mobile device and proceeded to make the transaction, explicitly acknowledging the risk of high slippage.
“The transaction could not move forward without the user explicitly accepting the risk,” he said, adding that the CoW Swap routers worked as intended and followed standard industry practices.
Still, the result was “clearly far from optimal,” Kulechov said.
Kulechov said Aave plans to contact the affected user and refund approximately $600,000 in fees charged for the transaction.
The loss comes just days after about $27 million worth of Aave was liquidated, in what some market participants say may have been caused by a temporary pricing issue related to the wstETH token.
