A large on-chain arbitrage trade appeared after Binance’s hot wallet was hacked early today and withdrawals were suspended. The attacker, seeking to avoid a potential freeze of USDT by the issuer, swapped large amounts of USDT into ETH on-chain. At the same time, ETH held on exchanges could not be moved out, and ETH on Uniswap briefly traded at a premium of as much as 50% to exchange prices.
ChainCatcher said a trader entered 24 minutes after the incident and made about $3.47 million by exploiting the spread between Aave and Uniswap. A review of on-chain records in the source indicates the trade did take place, but the profit came from a spread that lasted only about an hour and required close to $37 million in capital.
Exchange-linked oracle pricing diverged from Uniswap
Trading records from Uniswap’s three main ETH pools show ETH began to detach from exchange pricing at around 04:30. At 05:09, one trade printed at $3,487, while Chainlink’s price at the same time was only $2,260.
Aave used Chainlink prices to calculate collateral and borrowing values. Chainlink aggregated exchange prices, and during this period it did not rise with Uniswap. That meant the same collateral could support more ETH borrowing, while the position would not be liquidated simply because ETH on Uniswap had spiked.
How address 0x0cdd…e661d8 executed the trade
On-chain data shows address 0x0cdd…e661d8 began operating at 04:48. It deposited USDC into Aave as collateral, borrowed ETH, then sold that ETH into USDC through aggregators including 0x and CoW Swap. After prices fell back, it bought ETH again and repaid the loan. In practical terms, it was a short ETH trade that captured the gap between the sell price and the later buyback price.
The direct cash cost of the trade was limited. The source says the address sent more than 100 transactions during the period, with total gas costs of about $46,000. Aave’s annual borrowing rate was about 2%, and because the loan was open for less than two and a half hours, interest was almost negligible. Exchange and aggregator fees were already reflected in execution prices.
The real barrier was capital. The address deposited about $36.87 million in USDC as collateral to borrow 11,701 ETH. That collateral could be withdrawn afterward, but it had to be mobilized within 24 minutes of the incident, and the trader had to complete more than 100 transactions within about an hour.
Sold at $2,580 on average, bought back at $2,298
According to the on-chain records cited, the address started selling ETH in batches at 04:50 and sold 12,289 ETH at an average price of $2,580. After the spread narrowed, it bought back 12,314 ETH at an average price of $2,298 and repaid the full loan by 06:50.
The difference between the sale and repurchase prices, plus the extra 24 ETH bought back, produced profit of about $3.47 million, matching ChainCatcher’s figure. After gas, profit was about $3.42 million. Based on the capital committed, the return over roughly two hours was about 9%.
The source also notes that several ETH outflows from the address do not show corresponding inflows within the same transaction trail. That portion was not included in the profit estimate above.
The window was brief, and the risks were real
The biggest risk in the trade was price direction. If the borrowed ETH had kept rising instead of falling after being sold, the cost of buying it back would have exceeded the sale price.
The spread also closed quickly. The five-minute median premium on Uniswap reached a peak of 27% around 05:05. After 05:35, it had narrowed to just 1% to 2%, leaving much less room for anyone entering later.
Platform rules were another variable. According to Coinspectator, Aave later paused new deposits and borrowing, while repayments and withdrawals remained open. That allowed the address to close the position normally. If repayments had also been paused, the position would have remained exposed to price swings for longer.
Position safety also depended on Chainlink continuing to track exchange prices. If the oracle had switched to following Uniswap, the ETH debt would have been revalued and the position could have been liquidated.
Key figures from the trade
- Spread: ETH on Uniswap traded as high as $3,487, while the Chainlink price used by Aave was $2,260.
- Cost: Gas was about $46,000, borrowing interest was almost negligible, but the trade required about $37 million in collateral capital.
- Profit: The address sold at an average of $2,580 and bought back at an average of $2,298, generating about $3.47 million in profit, or about $3.42 million after gas.
- Risk: The trade was effectively a short ETH position. The spread narrowed in less than an hour, and the position’s safety depended on platform rules and oracle pricing.
