Recently, there was an incident that caused quite a stir in the cryptocurrency market. A user lost over $50 million in a single transaction due to slippage.

Looking at the on-chain data, this user attempted to swap aEthUSDT for aEthAAVE via CoW Protocol. However, because the liquidity pool was not deep enough, the slippage exceeded 99%, creating an abnormal situation. As a result, despite investing about $50.43 million, they only received 327 aEthAAVE (worth approximately $36k). The remaining difference was absorbed by arbitrageurs and intermediaries.

Aave founder Stani Kulechov issued an explanation regarding this incident. According to him, the user tried to purchase AAVE using $50 million worth of USDT through Aave’s interface. Since this was an unusually large single order, the system displayed an extreme slippage warning and asked the user to confirm via a checkbox. The user approved the warning on a mobile device and then executed the transaction.

Kulechov stated that the CoW Swap router functioned properly and followed industry-standard processes. However, the outcome was clearly undesirable. Interestingly, Aave plans to contact this user and refund approximately $600k in fees generated from this transaction.

This event offers an important lesson to the market. It highlights how serious the risks of slippage can be when executing large single trades. The fact that the interface issued a warning, yet the user still approved it, prompts reflection on the balance between DeFi convenience and risk management.

For reference, a few days ago, another incident occurred where about $27 million in positions on Aave were forcibly liquidated. Some market participants suggest this may be related to temporary price determination issues with wstETH. The frequent occurrence of such large trades and liquidation events underscores the vulnerabilities in liquidity and price discovery mechanisms.