Investor Loses $50M in Sandwich Attack While Swapping USDT for AAVE

An anonymous trader attempted to convert 50.43 million USDT into AAVE tokens using the CoW Protocol aggregator and the SushiSwap decentralized exchange. The outcome was devastating: instead of receiving a reasonable amount of tokens, the investor ended up with just 327 AAVE worth approximately $36,000.

How an MEV Bot Extracted $9.9M in Profit

The effective purchase price worked out to roughly $154,000 per AAVE token, while the market rate at the time hovered around $114. This staggering discrepancy resulted from a textbook sandwich attack executed by an MEV bot.

The bot monitored pending transactions in the mempool and followed a well-known playbook:

• Took a $29 million flash loan in WETH through the Morpho protocol;
• Purchased a large volume of AAVE on Bancor, artificially inflating the token's price;
• Let the victim's transaction execute — the investor bought tokens at the bloated price;
• Sold its own tokens on SushiSwap, locking in $9.9 million in profit.

Why This Matters

This incident ranks among the largest single losses from a sandwich attack in DeFi history. It starkly illustrates the vulnerability of even major decentralized platforms to MEV exploitation. Maximal Extractable Value remains a systemic threat for on-chain traders, and the scale of losses in this case raises urgent questions about whether protocol-level and interface-level safeguards need to be significantly more aggressive.

Ethereum co-founder Vitalik Buterin has previously identified MEV as one of the key threats to the network's decentralization. Last April, an MEV bot intercepted $200,000 from participants in the PROMPT airdrop by Wayfinder — but the current episode dwarfs that incident by orders of magnitude.

Response From Aave and CoW Protocol

Aave founder Stani Kulechov stated that the protocol's interface had warned the investor about "extraordinary slippage" due to the abnormally large order size. The trader nonetheless confirmed the transaction from a mobile device, accepting all conditions.

"Earlier today, a user attempted to buy AAVE using $50M USDT through the Aave interface. Given the unusually large size of the single order, the Aave interface, like most trading interfaces, warned the user about extraordinary slippage and required confirmation via a checkbox…" — Stani.eth (@StaniKulechov), original post

Kulechov added that the Aave team will reach out to the affected user and refund $600,000 in fees the protocol earned from the transaction.

The CoW DAO team took a similar stance. Developers confirmed that the user had seen warnings about near-total loss of funds but consciously approved the trade. According to the team, no DEX or aggregator could have executed an order of this magnitude at a reasonable price.

"Statement from CoW Protocol: Earlier today, a trader attempted to swap 50M aEthUSDT for aEthAAVE through Aave's swap interface, which is powered by CoW Protocol. Despite clear warnings that showed the user they would lose nearly all of the value of their transaction…" — CoW DAO (@CoWSwap), original post

CoW DAO acknowledged that the incident highlights the inadequate state of user experience in DeFi when it comes to safety. The team is evaluating how to strengthen protective mechanisms while preserving user autonomy. They also committed to returning all fees generated from the transaction.