On March 12, a wallet on the Ethereum network swapped about $50.4 million in USDT for AAVE via the Aave interface. The wallet received 327 AAVE tokens worth roughly $36,000 at the time, implying an effective price near $154,000 per token versus a market price around $114. The loss was approximately $49.96 million. No protocol hack or exploit occurred; the transaction executed exactly as signed.
The trade was routed through CoW Protocol, converting aEthUSDT back into USDT via Aave V3, then moving through a Uniswap liquidity pool to acquire wrapped Ether before entering a SushiSwap pool for the AAVE pair. The SushiSwap pool contained about $73,000 in liquidity, so a $50 million order produced a 99% price impact. The on-chain quote shown before confirmation indicated fewer than 140 AAVE would be returned before fees, and the user still confirmed. The 1.21% slippage setting applied by the interface proved insufficient to mitigate the liquidity depth issue.
Funds did not vanish; liquidity providers and MEV actors captured portions of the value. MEV bot activity included a sandwich attack by Titan Builder that Arkham Intelligence estimates extracted about $34 million, with a second bot taking roughly $10 million. Aave founder Stani Kulechov said the protocol would refund about $600,000 in fees and emphasized that fully reversing a confirmed transaction is not possible in a permissionless system. CoW DAO said its interface displayed clear price-impact warnings and that the trade executed according to the signed order, underscoring the risks of extreme liquidity shocks in DeFi.
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