A trader using Aave’s interface to swap $50 million in USDT for AAVE received only 324 AAVE after accepting a quote that carried an estimated 99% price impact. The trade was confirmed on a mobile device after the interface displayed warnings and required manual acknowledgment of the risk.
Warnings appeared before the order was executed
Aave founder Stani Kulechov said the unusually large transaction triggered clear alerts before execution. The user was shown that the quote involved extraordinary price impact and had to actively confirm that risk by checking a box. In a post on X, Kulechov said incidents like this can happen in DeFi, but the size of the order was far above what is usually seen.
He also said Aave would try to contact the trader and return roughly $600,000 in fees collected from the swap.
The issue was the accepted quote, not slippage tolerance
The transaction was routed through CoW Swap, whose auction-based system is intended to search for the best available liquidity across decentralized exchanges. According to Aave, the routing infrastructure operated as designed and followed common market practice, even though the outcome for the trader was highly unfavorable.
Aave engineer Martin Grabina later said the problem was not caused by slippage settings. Slippage tolerance only defines how much price movement can be accepted between signing and execution. In this case, the quote itself was already extremely poor at the moment the order was submitted. He said the trade used the interface’s suggested slippage tolerance of 1.21%, while analytics showed the auction mechanism actually delivered a 0.7% improvement for the trader.
That means the execution did not spiral out of control after submission. The damaging factor was the quote that had already been accepted.
Aave and CoW Swap are reviewing safeguards
Aave said it is now working with CoW Swap to examine why available liquidity sources produced such a bad quote and whether stronger protections can be added. The team said any changes would need to protect users without undermining the permissionless structure of decentralized finance.
Based on what has been disclosed so far, Aave’s position is straightforward: the interface showed a price-impact warning, the user explicitly confirmed the trade, the routing mechanism functioned normally, and the next step is to review front-end safeguards while refunding part of the fees.