TLDR
- An individual cryptocurrency trader suffered a catastrophic loss of approximately $50 million during a single token exchange on the Aave decentralized platform, caused by severe slippage.
- Following the swap of $50.4 million, the trader received merely 327 AAVE tokens valued at around $36,000.
- The Aave interface displayed numerous slippage warnings prior to execution, which the trader acknowledged and bypassed on a mobile device.
- An automated MEV (Maximal Extractable Value) bot executed a “sandwich attack” on the same transaction, extracting approximately $10 million in gains.
- The Aave protocol has committed to refunding roughly $600,000 in transaction fees to the impacted user.
On Thursday, March 12, 2026, a cryptocurrency trader experienced one of the most devastating single-transaction losses in decentralized finance history, hemorrhaging nearly $50 million through a token swap executed on the Aave protocol.
The individual’s digital wallet, which had received funding via Binance shortly before the incident, contained $50,432,688 worth of aEthUSDT. This represents an interest-generating token variant associated with Tether’s USDT stablecoin, which had been deposited within the Aave lending ecosystem operating on the Ethereum blockchain.
The trader initiated a conversion of the entire balance into aEthAAVE, which is a derivative of the Aave governance token. This exchange was facilitated through CoW Protocol with execution occurring via the SushiSwap decentralized exchange platform.
Due to the transaction’s massive size relative to the available liquidity within the trading pool, the order executed with slippage exceeding 99%. The final outcome left the wallet holding a mere 327 AAVE tokens, worth only approximately $36,000.
This means the trader effectively paid around $154,000 for each AAVE token. Meanwhile, the prevailing market price stood at roughly $114 per token.
Warning Messages Were Displayed
Stani Kulechov, the founder of Aave, verified that the platform’s user interface had issued clear warnings before the transaction was executed. He shared on X that the system alerted the user regarding “extraordinary slippage” stemming from the “unusually large size of the single order.”
Earlier today, a user attempted to buy AAVE using $50M USDT through the Aave interface.
Given the unusually large size of the single order, the Aave interface, like most trading interfaces, warned the user about extraordinary slippage and required confirmation via a checkbox.…
— Stani.eth (@StaniKulechov) March 12, 2026
The platform’s interface mandated that the user actively select a checkbox acknowledging comprehension of the associated risks. The user completed this confirmation process via mobile device and continued with the transaction.
“The transaction could not be moved forward without the user explicitly accepting the risk,” Kulechov stated. He emphasized that the CoW Swap routing mechanisms functioned according to their design specifications.
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.”
Statement from CoW Protocol:
Earlier today, a trader attempted to swap 50M aEthUSDT for aEthAAVE through Aave’s swap interface, which is powered by CoW Protocol. Despite clear warnings that showed the user they would lose nearly all of the value of their transaction, and despite… https://t.co/Pav4udXUkX
— CoW DAO (@CoWSwap) March 13, 2026
How the MEV Bot Exploited the Transaction
Compounding the slippage-related losses, an automated MEV bot performed what the crypto community refers to as a “sandwich attack” targeting this specific transaction.
These MEV bots continuously scan pending blockchain transactions for profitable opportunities. In this particular instance, the bot identified the substantial incoming AAVE purchase order and positioned itself to capitalize on it.
The bot utilized a flash loan to borrow $29 million in wrapped Ether from Morpho, deployed those funds to purchase AAVE tokens on Bancor (thereby inflating the price), then liquidated its position directly into the user’s order on SushiSwap. This sophisticated maneuver generated approximately $9.9 million in profits for the bot operator.
This front-running strategy artificially elevated AAVE’s price immediately before the user’s order completed, further deteriorating an already disastrous situation.
This incident occurred merely days following liquidations totaling roughly $27 million on Aave, which certain market observers suggested might have been connected to a transient pricing anomaly involving the wstETH token.
Kulechov expressed that Aave empathizes with the affected trader. The protocol has announced intentions to contact the user and reimburse approximately $600,000 in fees that were collected from this transaction.
CoW DAO similarly committed to refunding any protocol-level fees associated with the trade.
