A crypto user lost about $50 million in a single trade on Thursday after executing a large token swap that caused a massive slippage.
Blockchain data shows that the wallet attempted to exchange $50,432,688 aEthUSDT – an interest-bearing token representing the value of Tether. $USDT stablecoin deposited into the Aave decentralized lending protocol on the Ethereum network – for aEthAAVE – a similar version of Aave governance tokens – via the CoW protocol.
The transaction was executed with over 99% slippage due to low liquidity in the relevant trading pools, leaving the wallet with only approximately 327 aEthAAVE tokens, worth approximately $36,000 after the transaction. The difference in value was quickly absorbed by arbitrage traders and network intermediaries.
Large losses due to slippage occasionally occur in decentralized finance (DeFi) when traders attempt to execute unusually large orders against shallow liquidity pools. In such cases, automated arbitrage systems quickly exploit the price dislocations caused by trading.
Stani Kulechov, founder of the Aave Protocol, said the transaction went through despite multiple warnings to the user before the transaction was confirmed.
“Earlier today a user tried to buy AAVE for $50 million $USDT via the Aave interface,” Kulechov said in an X post. “Given the unusually large size of the single order, the interface warned the user of extraordinary slippages and required confirmation via a checkbox.”
According to Kulechov, the user accepted the warning on his mobile device and proceeded with the transaction, explicitly recognizing the risk of major derailments.
“The transaction could not proceed without the user explicitly assuming the risk,” he said, adding that the CoW Swap routers functioned as intended and followed standard industry practices.
Still, the outcome was “clearly far from optimal,” Kulechov said.
Kulechov said Aave plans to contact the affected user and return approximately $600,000 in fees collected for the transaction.
The loss comes just days after approximately $27 million was liquidated on Aave, which some market participants said may have been caused by a temporary price issue involving the token wstETH.