Aave has released a report on the "aEthAAVE Loss Incident," in which a user attempted to exchange approximately $50.43 million worth of aEthUSDT for aEthAAVE via the CoW Swap router integrated into Aave’s interface. Due to the order size far exceeding available market liquidity, CoW Swap displayed a price impact of up to 99.9%. The interface issued a prominent warning and required the user to check a box confirming "I understand I may lose 100% of my value." Despite this, the user manually confirmed the transaction on mobile and proceeded, ultimately receiving only about 327 aEthAAVE (worth approximately $36,000). The Aave protocol itself was unaffected; the loss occurred at the third-party protocol level. The transaction incurred approximately $110,000 in fees, which Aave has stated will be refunded to the user upon completion of identity verification. In response to this incident, Aave announced it will soon launch the "Aave Shield" feature, which will default to blocking transactions with price impacts exceeding 25% to prevent users from suffering significant losses due to accidental actions.
Aave Releases Report on the aEthAAVE Exchange Loss Incident
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Summary
Aave disclosed on-chain news regarding a recent loss from an aEthAAVE exchange involving a $50.43 million aEthUSDT swap via CoW Swap. The trade experienced a 99.9% price impact due to low liquidity. After confirming a 100% loss warning, the user received only $36,000 worth of aEthAAVE. Aave clarified that the incident was not caused by its protocol but by a third-party issue. The failed trade generated $110,000 in fees, which will be refunded. Aave will soon launch Aave Shield, a tool to block transactions with a price impact exceeding 25%. The event underscores the risks associated with decentralized exchanges and reinforces concerns about potential exchange hacking scenarios.
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