Aave and CoW Protocol published separate post-mortem reports over the weekend dissecting the March 12 swap that resulted in a trader converting $50.4 million in USDT into roughly $36,000 worth of AAVE tokens, widely considered the largest execution loss of its kind in decentralized finance (DeFi).

The two accounts largely agree on the basic sequence of events but diverge sharply in emphasis and tone, with Aave framing the loss as the predictable consequence of trading in an illiquid market and CoW Swap painting a more complex picture of compounding infrastructure failures that made the outcome dramatically worse than it needed to be.

‘An Illiquid Market’

Aave’s analysis drew a technical distinction between price impact and slippage, arguing that the two are often conflated. The protocol said, “the primary root cause was the routing of a large trade through a market with poor liquidity, leading to an extreme price impact.”

“It is critical to distinguish between price impact due to an illiquid market and price impact due to slippage,” the team wrote. The user was quoted a price that was already 99.9% below expected market value before the swap even executed, Aave said, and the interface displayed a warning flagging the extreme price impact and required the user to check a confirmation box acknowledging a potential 100% loss.

An internal audit trail confirmed the user acknowledged the warning on a mobile device before proceeding, meaning the catastrophic outcome was visible to the user at the point of confirmation.

Aave stressed that its core lending protocol was never at risk, since the swap occurred via a third-party CoW Swap integration rather than through the protocol’s smart contracts.

‘Technically Correct Is Not the Ceiling’

CoW Swap’s report told a markedly different story, identifying what it called a “chain of compounding factors” that turned an already bad trade into something far worse.

During the initial quoting phase, three independent solvers submitted potential routes. The best unverified quotes would have returned roughly $5–6 million worth of AAVE for the $50 million order, still an approximately 90% loss but dramatically better than the $36,000 the user ultimately received.

Those better-priced routes never reached the user. CoW Swap’s quote verification system enforced a hardcoded 12-million gas unit ceiling — what the team described as “legacy code predating current gas consumption patterns” — which caused the more efficient routes to fail verification. The only quote that passed came from a solver offering roughly 329 AAVE tokens, far worse than the rejected alternatives. That figure was then used to set the order’s limit price in the Aave interface.

The situation deteriorated further in the auction phase. A solver identified in the report as “Solver E” won two consecutive auctions with a superior execution route but never submitted either transaction onchain. After two failed attempts, the solver stopped bidding entirely, leaving the worst route as the only remaining option.

CoW’s report also flagged evidence of a possible mempool leak. Despite the transaction being submitted via a private RPC endpoint, Etherscan displayed a “confirmed within 30 seconds” tag — a marker that typically appears only when a transaction is visible in the public mempool before being included in a block. CoW said the leak likely enabled the significant MEV activity observed in the execution block.

CoW struck a notably more self-critical tone than Aave throughout its report, acknowledging that a confirmation checkbox is an inadequate safeguard when trades involve tens of millions of dollars.

“Technically correct is not the ceiling we should be building toward,” the team wrote.

CoW said it has already deployed a fix removing the stale gas ceiling and is continuing to investigate both the solver execution failures and the suspected mempool leak.

AAVE is trading around $121, up roughly 6% over the past 24 hours, according to CoinGecko. Aave is the largest DeFi lending protocol with approximately $25.5 billion in total value locked, per DefiLlama.

This article was written with the assistance of AI workflows. All our stories are curated, edited and fact-checked by a human.