PANews, March 15: Aave has released a post-event review of the March 12 Swap incident, stating that a user executed a token swap via its frontend integrated with CoW Swap, attempting to exchange approximately 50.43 million aEthUSDT (valued at around $50.43 million) for aEthAAVE. Due to the transaction size far exceeding market liquidity, the user ultimately received only about 327 aEthAAVE, worth approximately $36,000. Aave emphasized that the transaction occurred on the third-party protocol CoW Swap and did not compromise the security of Aave’s core lending protocol. The quoted price indicated a price impact of up to 99.9%, and the interface clearly warned: “May result in 100% value loss,” requiring the user to explicitly confirm before proceeding. On-chain execution showed that the funds were first swapped from USDT to WETH via the Uniswap V3 USDT/WETH pool, then used to purchase AAVE through the SushiSwap AAVE/WETH pool, ultimately generating approximately 331 AAVE, which were deposited into Aave V3 to mint aEthAAVE. Aave noted that the root cause of this incident was extreme price impact caused by a large transaction in a low-liquidity market, not slippage. As an improvement, Aave plans to launch the “Aave Shield” protection mechanism, which will default to blocking any swap with a price impact exceeding 25%; users must manually disable this protection to proceed with high-risk transactions. Additionally, this transaction incurred approximately $110,000 in swap fees; Aave stated that if the user contacts them and completes the verification process, it will consider refunding the associated fees.
Aave Reports Swap Incident: User Exchanged $50.43M aEthUSDT for $36K AAVE Due to Liquidity Shortage
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Summary
Aave disclosed a swap incident in which $50.43M in aEthUSDT was converted to $36K in AAVE due to liquidity shortages. The March 12 trade executed via CoW Swap resulted in 327 aEthAAVE, with a 99.9% price impact. Aave plans to implement "Aave Shield" to block swaps with a price impact exceeding 25%. The transaction generated $110K in fees, which may be refunded. Other altcoins may face similar risks amid ongoing liquidity challenges.
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