TLDR

• Extreme slippage on Aave led to a devastating loss of nearly $50 million for one cryptocurrency trader in a single swap transaction.
• The transaction converted $50.4 million into approximately 327 AAVE tokens valued at just $36,000.
• The trader acknowledged and bypassed several explicit slippage warnings on mobile before executing the trade.
• An MEV bot executed a sandwich attack on the same transaction, extracting close to $10 million in profits.
• The Aave protocol announced plans to refund approximately $600,000 in protocol fees to the impacted trader.

On Thursday, March 12, 2026, a cryptocurrency trader experienced one of the most devastating losses in DeFi history, losing approximately $50 million in just one transaction. The incident occurred while executing a token swap on Aave, a prominent decentralized finance platform.

The wallet in question, freshly funded via Binance, contained $50,432,688 worth of aEthUSDT. These interest-bearing tokens represent Tether’s USDT stablecoin deposited within the Aave lending ecosystem operating on Ethereum.

The trader initiated a swap to exchange the entire balance for aEthAAVE, the tokenized version of Aave’s governance token. This transaction was processed through CoW Protocol and executed on the SushiSwap decentralized exchange.

Due to the massive size of the order relative to available pool liquidity, the swap suffered catastrophic slippage exceeding 99%. The final result was a mere 327 AAVE tokens worth roughly $36,000.

Effectively, the trader paid approximately $154,000 for each AAVE token when the prevailing market rate stood at around $114.

What the Warnings Said

Stani Kulechov, founder of Aave, verified that the platform’s user interface had displayed prominent warnings before execution. In a post on X, he explained that the system alerted the user about “extraordinary slippage” resulting from the “unusually large size of the single order.”

The platform mandated that users check a confirmation box acknowledging the risk. The trader completed this step on a mobile device and moved forward with the transaction.

“The transaction could not be moved forward without the user explicitly accepting the risk,” Kulechov stated. He emphasized that the CoW Swap routing system functioned exactly as designed.

CoW DAO released its own statement, 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

Compounding the slippage disaster, an MEV bot launched a sophisticated “sandwich attack” targeting this transaction.

MEV bots constantly scan pending blockchain transactions for profitable opportunities. This particular bot identified the massive incoming AAVE purchase and positioned itself to exploit it.

The bot secured a flash loan of $29 million in wrapped Ether from Morpho, deployed it to purchase AAVE on Bancor (artificially inflating the price), then sold directly into the trader’s order on SushiSwap. This strategy generated approximately $9.9 million in profits for the bot operator.

The manipulation drove AAVE’s price significantly higher immediately before the trader’s order executed, amplifying an already catastrophic outcome.

This incident followed closely after approximately $27 million in liquidations on Aave, which some observers suggested might have been connected to a temporary pricing anomaly affecting the wstETH token.

Kulechov expressed sympathy for the affected trader. The Aave protocol intends to contact the user and reimburse approximately $600,000 in fees collected during the transaction.

CoW DAO similarly committed to refunding any protocol fees associated with the trade.

Update March 12, 1:21 pm UTC: This article has been updated to include comments from Gracy Chen, CEO of crypto exchange Bitget.

The US midterm elections may be the next catalyst to kickstart the crypto and stock market recovery, according to historical data shared by Binance Research.

According to a Wednesday report from Binance Research, US midterm election cycles have historically been followed by strong rebounds in stocks and Bitcoin (BTC), potentially setting up a recovery window for risk assets after the 2026 vote.

The 12 months following US midterm elections have resulted in an average 19% rise in the S&P 500 and 54% rise for Bitcoin in the three post-midterm years on record.

Binance Research said the year following the US midterms may prove the “strongest window in the cycle,” arguing that markets have historically rallied after election outcomes remove a major source of political uncertainty.

“Once election outcomes are determined and uncertainty is resolved, markets have historically staged powerful rallies.”

Bitcoin logged negative returns during previous midterm years, including a 56% drawdown in 2014, 73% decline in 2018 and a 64% retracement in 2022, but historic patterns showed a rebound in the following years.

The report comes nearly eight months before the Nov. 3 US midterm elections, which will determine the makeup of the 120th Congress.

Binance said near-term market direction is more likely to be driven by the conflict involving the US, Israel and Iran, warning that further escalation could push oil prices higher and keep risk assets under pressure.

Related: Can US lawmakers pass crypto market structure before the midterms?

Oil spike adds to market stress

Crude oil price briefly surged to $95 per barrel on Thursday as the conflict entered its 13th day, according to data from Trading Economics.

The price surge followed reports of Iran stepping up its attacks against energy infrastructure, as two fuel tankers were scorched by explosive-laden Iranian boats, Reuters reported earlier on Thursday.

A spokesperson for Iran’s military command told the news outlet that the world should prepare for oil prices of $200 per barrel due to the instability caused by the US.

The jump came a day after the International Energy Agency said member countries would carry out a 400 million-barrel emergency stock release, the largest coordinated drawdown on record.

Gracy Chen, CEO of crypto exchange Bitget, said the crypto market’s recovery hinges on a resolution to the conflict, as continued oil supply disruptions may “position oil to outperform gold as a hedge.” 

“In this environment, crypto’s higher-beta profile means its upside potential could still exceed traditional equities should liquidity conditions stabilize once political uncertainty clears,” she told Cointelegraph.

Related: US Senate bill targets prediction markets on war and assassinations

Global markets in “wait-and-see” phase amid geopolitical escalations

The ongoing developments in the Middle East remain the key driver for global risk sentiment, as uncertainty surrounding energy supply and military escalations left markets in a “wait-and-see phase where policy and geopolitical risks intersect,” analysts at crypto derivatives exchange Bitunix told Cointelegraph:

“Currently, BTC is fluctuating repeatedly below the $70,000 level, indicating that market activity remains dominated by liquidity sweeps both above and below.”

The market structure suggests that Bitcoin will remain bound to this range until “macro events provide clearer directional signals,” the analysts said.

Magazine: Bitcoin is ‘funny internet money’ during a crisis: Tezos co-founder