TLDR
- A catastrophic DeFi transaction on Aave resulted in a trader losing approximately $50 million due to massive slippage.
- The trader received merely 327 AAVE tokens valued at around $36,000 despite swapping over $50.4 million.
- Before executing the trade, the user acknowledged and dismissed several slippage warnings on their mobile device.
- An MEV bot exploited the transaction through a sandwich attack, extracting close to $10 million in profits.
- The Aave protocol has committed to refunding approximately $600,000 in fees to the impacted trader.
On Thursday, March 12, 2026, a cryptocurrency trader experienced a devastating loss of nearly $50 million through a single DeFi transaction on the Aave protocol.
The trader’s digital wallet, freshly funded via Binance, contained $50,432,688 worth of aEthUSDT—an interest-generating token linked to Tether’s USDT stablecoin that was deposited within Aave’s lending infrastructure on the Ethereum blockchain.
Attempting to exchange the entire balance for aEthAAVE, a tokenized form of Aave’s governance token, the user’s transaction was processed through CoW Protocol and routed via the SushiSwap decentralized exchange.
Due to the transaction’s enormous size relative to available pool liquidity, the swap suffered more than 99% slippage. The outcome was devastating: the wallet received a mere 327 AAVE tokens worth roughly $36,000.
Essentially, the trader paid approximately $154,000 for each AAVE token when the prevailing market rate was around $114.
What the Warnings Said
Stani Kulechov, Aave’s founder, verified that the platform’s interface had issued clear warnings before the transaction executed. According to his X post, the system alerted the user about “extraordinary slippage” stemming from the “unusually large size of the single order.”
The platform’s interface mandated that the user select a confirmation box acknowledging the risk. Using their mobile device, the user checked the box and continued with the transaction.
“The transaction could not be moved forward without the user explicitly accepting the risk,” Kulechov said. He added that the CoW Swap routers worked as intended.
CoW DAO released a 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 executed a “sandwich attack” targeting this transaction.
MEV bots scan the blockchain mempool for pending transactions. Upon detecting the substantial AAVE purchase order, the bot positioned itself to extract maximum value.
The bot secured a $29 million flash loan in wrapped Ether from Morpho, deployed it to purchase AAVE tokens on Bancor (artificially inflating the price), then liquidated its position directly into the user’s order on SushiSwap. This maneuver generated approximately $9.9 million in profit for the bot operator.
The attack artificially inflated AAVE’s price immediately before the user’s order completed, compounding an already disastrous situation.
This incident occurred merely days following roughly $27 million in liquidations on Aave, which some market observers suggested might have stemmed from a transient pricing anomaly affecting the wstETH token.
Kulechov expressed that Aave empathizes with the impacted trader. The protocol intends to contact the user and reimburse approximately $600,000 in fees it earned from the transaction.
CoW DAO similarly announced it would return any protocol fees associated with the trade.
