Aave and CoW Protocol published post-mortems over the weekend dissecting the March 12 swap that converted $50.4 million in USDT into roughly $36,000 worth of AAVE, widely considered the largest execution loss in DeFi. The two reports largely agree on the sequence of events but differ in emphasis: Aave frames the loss as a predictable consequence of trading in an illiquid market, while CoW Swap highlights a chain of infrastructure failures that amplified the outcome. Aave argues the primary root cause was routing a large trade through a market with poor liquidity, resulting in an extreme price impact, and notes the quote was already 99.9% below expected value before execution. The user was shown an extreme price impact and required to acknowledge a 100% loss, with an audit trail showing the warning was acknowledged on a mobile device before proceeding.
CoW Swap’s report identifies a chain of compounding factors that made the bad trade much worse. In the initial quoting phase, three independent solvers submitted routes; the best unverified quotes would have yielded roughly $5–6 million of AAVE for the $50 million order, about a 90% loss but far better than the $36,000 received. Those better routes never reached the user because a hardcoded 12-million gas unit ceiling, described as legacy code predating current gas consumption patterns, caused the efficient routes to fail verification; the only quote that passed offered about 329 AAVE tokens, which set the order’s limit price in the Aave interface.
The situation worsened in the auction phase when a solver identified as ‘Solver E’ won two consecutive auctions with a superior route but never submitted either transaction on-chain; after two failed attempts, the solver stopped bidding, leaving the worst route as the only option. CoW also flagged evidence of a possible mempool leak, noting that despite a private RPC submission, Etherscan displayed a ‘confirmed within 30 seconds’ tag, a signal usually seen when a transaction is visible in the public mempool before being included in a block. The report notes that the leak likely enabled significant MEV activity in the execution block and that both teams view the confirmation checkbox as an inadequate safeguard for trades of tens of millions of dollars; CoW has deployed a fix removing the stale gas ceiling and continues investigating solver failures and the mempool leak. AAVE was trading around $121, up about 6% in 24 hours, and remains the largest DeFi lending protocol with roughly $25.5 billion in total value locked.
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