SKN | Trader Loses Millions in DeFi Swap as MEV Bot Extracts $10M Profit

Key Points

• A crypto trader lost nearly the entire value of a $50 million token swap after severe slippage on a DeFi platform.
• An MEV bot front-ran the transaction, executing a sandwich attack that generated nearly $10 million in profit.
• Despite warnings about extreme slippage, the user approved the trade and received only a small fraction of the expected tokens.

A cryptocurrency trader suffered a near-total loss while attempting a large token swap involving Tether and Aave on decentralized finance platforms.

A wallet funded with roughly $50.4 million in USDT initiated a swap designed to convert the entire amount into AAVE tokens through CoW Protocol and the decentralized exchange SushiSwap.

Instead of receiving millions of dollars worth of tokens, the trader ended up with only around 327 AAVE tokens — valued at approximately $36,000.

The effective purchase price for the tokens was roughly $154,000 per AAVE, far above the market price near $114.

MEV Bot Executes Sandwich Attack

The situation was worsened by a Maximal Extractable Value (MEV) bot that targeted the transaction.

MEV bots monitor pending transactions on blockchain networks and attempt to profit by inserting their own trades before and after large transactions.

In this case, the bot launched a sandwich attack by first borrowing around $29 million in wrapped Ether through the lending platform Morpho.

The borrowed funds were used to buy AAVE tokens and artificially push the price higher before the victim’s transaction executed.

After the user’s swap completed at the inflated price, the bot sold the tokens at the elevated value, securing nearly $9.9 million in profit.

Automated Market Makers Amplified Slippage

Decentralized exchanges rely on automated market maker models that adjust token prices based on liquidity pools and trade size.

Because the user attempted to swap an unusually large amount in a single order, the transaction triggered extreme slippage — the difference between the expected price and the executed price.

According to blockchain data, the swap occurred through liquidity pools that could not absorb the trade without dramatically shifting prices.

User Ignored Slippage Warnings

The DeFi platforms involved reportedly warned the user about the extraordinary slippage before the transaction was confirmed.

Stani Kulechov explained that the interface clearly displayed warnings indicating the user would lose a large portion of the transaction’s value.

The trader confirmed the warning and proceeded with the swap anyway.

CoW Protocol developers later stated that the system required the user to explicitly accept the trade conditions after seeing the warning message.

Partial Fee Refund Planned

Following the incident, the team behind Aave said it sympathized with the trader and would attempt to contact them.

Kulechov indicated that the protocol may return approximately $600,000 in fees generated by the transaction.

The event highlights the risks associated with large trades on decentralized exchanges, particularly when liquidity is limited and automated trading bots exploit opportunities for profit.