In March 2026, a crypto whale lost an estimated $50 million due to a bad trade. An attempt to exchange aEthUSDT for AAVE resulted in massive slippage after the user went through with the trade despite warnings from the exchange.
What Went Wrong
A crypto whale attempted to trade approximately $50 million aEthUSDT for AAVE using the Aave interface. This interface included warnings to the user regarding the size of the transfer and the potential for slippage, requiring them to accept the risks using a checkbox.
The transaction was routed through the CoW Protocol to convert aEthUSDT into USDT, which was converted to wrapped Ether via a Uniswap liquidity pool. This was routed to a SushiSwap pool holding about $73,000 in total liquidity to perform the swap to AAVE. Before the transaction was performed, trade quotes estimated that the user would receive less than 140 AAVE tokens before fees.
The crypto whale approved the transaction, and it went through as planned. As a result, they only received about 324 AAVE worth approximately $36K in exchange for their $50M worth of aEthUSDT.
After the trade was discovered, Aave Labs founder and CEO, Stani Kulechov, posted an explanation of the situation and that this was expected behavior, detailing the risk of slippage and the need for explicit verification of the transaction. Aave also offered to return the $600k worth of fees that it collected from the transaction to partially compensate the crypto whale for their losses.
Lessons Learned from the Incident
One of the key selling points of Web3 is the level of independence and control that it offers. Users can “be their own bank,” and there are very few regulations or limitations in the space, allowing users to do what they want on-chain.
This freedom comes with its downsides, though, as demonstrated by this incident, potentially the largest of its kind to date. The whale behind this transaction received warnings about potential price impacts and slippage and needed to explicitly consent to carry out the transaction. This decision resulted in them losing almost $50 million due to the magnitude of the price impacts. And, the immutability of the blockchain’s digital ledger means that this money is lost to them forever.
This incident is a warning to Web3 users to do their research, making sure that they understand key risks — like liquidity and slippage — before they perform transactions on-chain. It’s also a call to action for Web3 projects to ensure that they’re protecting their users as much as possible while still respecting Web3 decentralization and users’ freedom.