In brief
- A trader swapping $50 million in USDT for AAVE received only 324 tokens after confirming a slippage warning.
- At AAVE’s current price of $111.52, the tokens received are worth roughly $36,100.
- Aave founder Stani Kulechov said the protocol will attempt to return about $600,000 in fees from the trade.
A crypto trader lost almost the entire value of a $50 million transaction on Thursday after executing a large swap for Aave’s governance token through the decentralized finance protocol’s trading interface.
The user attempted to buy AAVE with $50 million worth of the stablecoin USDT through the Aave interface, according to a statement posted on X by Aave founder Stani Kulechov.
Because the order was unusually large relative to available liquidity, the interface issued a warning flagging “extraordinary slippage” and required the user to manually confirm the risk.
The trader then proceeded with the swap on a mobile device after checking a confirmation box.
That transaction ultimately returned just 324 AAVE tokens. At a current market price of $111.52, the tokens are worth roughly $36,100, implying an effective loss of about $49.96 million relative to the original order size.
Kulechov said the Aave team will attempt to contact the trader and return approximately $600,000 in fees generated by the transaction.
By design
Kulechov said the trade was routed through CoW Swap, a decentralized trade-routing system integrated into the Aave interface, and that the infrastructure functioned as designed.
“The transaction could not be moved forward without the user explicitly accepting the risk,” Kulechov wrote. “However, while the user was able to proceed with the swap, the final outcome was clearly far from optimal.”
Large trades executed through decentralized exchanges can cause severe price impact when liquidity is insufficient or when orders are not broken into smaller increments.
Professional traders typically split large orders across multiple transactions or use execution algorithms to reduce market impact or minimize slippage.
Kulechov said the incident shows how decentralized finance platforms may need stronger guardrails to help prevent extreme user errors while preserving permissionless access.
“Our team will be investigating ways to improve these safeguards going forward,” Kulechov said.
The incident comes as Aave’s usage has surged.
Monthly active users on the lending protocol reached about 155,000 in February, an all-time high and nearly double the level six months earlier, according to Token Terminal data previously reported by Decrypt.
Daily Debrief Newsletter
Start every day with the top news stories right now, plus original features, a podcast, videos and more.
Source: https://decrypt.co/360961/crypto-trader-loses-nearly-50m-aave-trade-600k-fee-refund
