TLDR
- Extreme slippage caused a crypto trader to lose approximately $50 million during a token swap executed on the Aave platform.
- The transaction converted $50.4 million into approximately 327 AAVE tokens valued at around $36,000.
- The Aave interface displayed several slippage warnings prior to execution, each requiring manual confirmation on the user’s mobile device.
- A MEV (Maximal Extractable Value) bot executed a “sandwich attack” during the transaction, extracting close to $10 million in gains.
- The Aave protocol will return approximately $600,000 in fees collected from this transaction to the impacted user.
On Thursday, March 12, 2026, a crypto trader experienced a catastrophic loss of approximately $50 million through a single transaction on the decentralized finance protocol Aave.
The trader’s wallet contained $50,432,688 in aEthUSDT, having received funding via Binance shortly before the incident. This interest-bearing token represents Tether’s USDT stablecoin deposited within the Aave lending protocol operating on the Ethereum blockchain.
The wallet owner initiated a swap to convert the entire balance into aEthAAVE, which represents the Aave governance token. CoW Protocol and the SushiSwap decentralized exchange handled the routing for this transaction.
The enormous trade size relative to available pool liquidity resulted in slippage exceeding 99%. The final outcome left the wallet holding merely 327 AAVE tokens with a market value near $36,000.
The effective price paid reached approximately $154,000 per AAVE token, while prevailing market rates stood at roughly $114.
What the Warnings Said
Stani Kulechov, founder of Aave, verified that the Aave interface had issued alerts before the transaction processed. He shared on X that the platform notified the user about “extraordinary slippage” resulting from the “unusually large size of the single order.”
The platform required the user to manually select a confirmation checkbox acknowledging their awareness of the risks. The user completed this action through their mobile device and moved forward with the swap.
“The transaction could not be moved forward without the user explicitly accepting the risk,” Kulechov said. He added that the CoW Swap routers worked as intended.
CoW DAO provided additional context, explaining that “no DEX, DEX aggregator, public liquidity pool, or private liquidity pool would have been able to fill this trade at anywhere near a reasonable price.”
The MEV Bot Attack
Beyond the slippage damages, a MEV bot performed what traders call a “sandwich attack” targeting this transaction.
MEV bots scan pending blockchain transactions for profitable opportunities. This particular bot identified the substantial incoming AAVE order and positioned itself to capitalize.
The bot obtained a flash loan of $29 million in wrapped Ether from Morpho, deployed it to purchase AAVE on Bancor while inflating the price, then liquidated into the user’s trade on SushiSwap. The bot walked away with roughly $9.9 million in gains.
This attack artificially elevated the AAVE price moments before the user’s order executed, compounding the already severe losses.
This incident occurred merely days following approximately $27 million in liquidations on Aave, which some market observers suggested might have connected to a transient pricing anomaly with the wstETH token.
Kulechov expressed that Aave sympathizes with the affected user. The protocol intends to contact them and reimburse approximately $600,000 in fees it collected from the transaction.
CoW DAO announced it would similarly refund any protocol fees associated with the trade.
