A cryptocurrency user lost approximately $50 million in a single trade on Thursday after executing a large-scale token swap and triggering massive slippage.
Blockchain data shows that the wallet attempted to exchange $50,432,688 worth of aEthUSDT (a USDT stablecoin representing Tether, an interest-bearing token deposited in the Aave decentralized lending protocol on the Ethereum network) for aEthAAVE (a similar version of the Aave governance token) through the CoW protocol.
Due to thin liquidity in the relevant trading pool, more than 99% slippage occurred during trade execution, leaving only about 327 aEthAAVE tokens in the wallet, worth about $36,000 after the trade. Differences in value are quickly captured by arbitrage traders and online intermediaries.
Large losses caused by slippage occasionally occur in decentralized finance (DeFi) when traders attempt to execute unusually large orders against shallow liquidity pools. In this case, automated arbitrage systems are quick to exploit the price dislocation created by the trade.
Aave protocol founder Stani Kulechov said the transaction was completed despite multiple warnings to users before confirming the transaction.
“Earlier today, a user attempted to purchase AAVE using $50 million in USDT through the Aave interface,” Kulechov said in an X post. “Given the unusually large size of individual orders, the interface warns users about unusual slippage and requires confirmation via a checkbox.”
According to Kulechov, users accepted the warning on their mobile devices and continued trading, explicitly acknowledging the high risk of slippage.
“Without the user’s clear acceptance of the risk, the transaction cannot move forward,” he said, adding that the CoW Swap router operates as expected and follows standard industry practice.
Still, the results were “clearly far from optimal,” Kulechov said.
Kulechov said Aave plans to contact affected users and refund approximately $600,000 in transaction fees.
Just days ago, Aave was liquidated for around $27 million, which some market participants said could be due to temporary pricing issues involving the token wstETH.
