A crypto user lost roughly $50 million in a single transaction on Thursday after executing a large token swap that triggered massive slippage. Blockchain data shows the wallet attempted to swap $50.43 million worth of aEthUSDT — an interest-bearing token representing USDT deposited into Aave on Ethereum — for aEthAAVE via the CoW Protocol. Due to thin liquidity in the relevant trading pools, the transaction executed with over 99% slippage, leaving the wallet with only about 327 aEthAAVE, worth approximately $36,000. Arbitrage traders and network intermediaries quickly captured the difference. Blockchain security firm BlockSec told CoinDesk that arbitrageurs extracted over $43 million in profit within the same block, of which $32.6 million went to the block builder, the entity that assembles and orders transactions.
Large slippage losses occasionally occur in DeFi when traders execute unusually large orders against shallow liquidity pools. Automated arbitrage systems rapidly exploit the resulting price dislocations. In this case, the markets for aEthUSDT and aEthAAVE lacked the depth that native USDT or AAVE pools have, making even a single order capable of puncturing the order book.
Aave founder Stani Kulechov posted on X describing the incident. He said the user attempted to buy AAVE using $50M USDT through the Aave interface. "Given the unusually large size, the interface warned about extraordinary slippage and required confirmation via a checkbox," Kulechov wrote. According to Kulechov, the user accepted the warning on their mobile device and proceeded with the trade, explicitly acknowledging the risk of high slippage. "The transaction could not proceed without explicit acceptance," he added, noting that the CoW Swap routers functioned as intended and followed standard industry practices. Still, the outcome was "clearly far from optimal."
Kulechov said Aave plans to contact the affected user and return roughly $600,000 in fees collected from the transaction.
Aave's Recent $27M Liquidation
The incident comes just days after approximately $27 million was liquidated on Aave, which some market participants attribute to a temporary pricing issue involving the wstETH token.