Trader swaps $50M USDT for just $36K in AAVE after extreme slippage

A decentralized finance [DeFi] trader executed a massive swap, exchanging over $50 million in USDT for only about $36,000 in AAVE tokens.

On-chain data shows that the user attempted to purchase AAVE using 50,432,688 USDT through the Aave interface. 

The funds were withdrawn from Aave and routed through CoW Protocol. This on-chain liquidity aggregator executes trades across decentralized exchanges.

However, the transaction ultimately returned just about 327 AAVE, valued at roughly $36,297, indicating extremely high slippage.

Aave says user confirmed slippage warning

Aave founder Stani Kulechov said the platform warned the trader about the unusually large order before the swap was executed.

According to Kulechov, the Aave interface flagged the trade as having extraordinary slippage. It required the user to explicitly acknowledge the risk before proceeding.

“The user confirmed the warning on their mobile device and proceeded with the swap, accepting the high slippage,” Kulechov wrote.

Because DeFi platforms are permissionless, transactions can still proceed once the user confirms the associated risks.

Kulechov noted that while such events occasionally occur in decentralized markets, the size of this particular transaction was far larger than typical trades, increasing the likelihood of extreme price impact.

CoW DAO says no exploit occurred

Following the incident, CoW DAO, whose routing infrastructure facilitated the swap, said there is no indication of an exploit or malicious activity.

In a statement posted on X, the team said the transaction was executed in accordance with the parameters specified in the signed order.

“Based on what we’ve seen so far, there’s no indication of a protocol exploit or otherwise malicious behavior. The transaction executed according to the parameters of the signed order,” the team said.

CoW Protocol added that its interface, as well as the Aave interface used in the transaction, displayed clear price impact warnings for swaps of that magnitude.

The protocol said it is continuing to review the transaction and will share updates if additional details emerge.

Aave to refund $600K in fees

Although the swap itself cannot be reversed, the Aave team said it plans to return approximately $600,000 in fees collected from the transaction.

Kulechov said the team is also attempting to contact the trader involved.

“We sympathize with the user and will try to make contact with the user,” he said.

The incident has also prompted discussion within the DeFi community about whether additional safeguards could help prevent similar outcomes in the future.

Final Summary

• A trader attempting to buy AAVE with $50 million USDT received only about $36,000 worth of tokens due to extreme slippage.
• Aave and CoW Protocol say the trade executed as signed and showed clear price impact warnings. At the same time, Aave plans to refund about $600,000 in fees collected from the transaction.