DeFi News Whale Blunder: $50 Million Trade Gone Wrong, MEV Bot Scoops $10 Million

A cryptocurrency user suffered a significant loss, worth millions of dollars, while conducting a cryptocurrency swap on the decentralized finance protocol Aave. Meanwhile, a maximum extractable value (MEV) bot front-ran the transaction, profiting nearly $10 million. The end result was a near-total loss, with the user purchasing AAVE at a unit price of approximately $154,000, while the market price at the time was around $114. To add insult to injury, an MEV bot executed a "sandwich attack" on the user. MEV bots scan pending blockchain transactions, and in this case, the bot targeted this large AAVE order, driving up the price of the token before the order was executed, thereby generating a huge profit.

Blockchain transaction showing aEthUSDT swapped for aEthAAVE on March 12. Source: Etherscan Aave: User Ignored Slippage Warning Automated market makers (AMMs) such as SushiSwap use automated pricing formulas to adjust slippage—the difference between the expected price and the actual price of a trade—depending on the size of the trading pool and the impending transaction. Aave's Kulechov stated that the user ignored the warning on their mobile device and proceeded with the swap, accepting high slippage and ultimately receiving only 324 AAVE. Kulechov said that Aave sympathizes with the user's plight and will attempt to contact the user to refund the $600,000 fee collected from the transaction.