Decentralized finance protocol Aave will deploy “Aave Shield,” a new safety feature that blocks token swaps with price impact exceeding 25%. The move follows a catastrophic trade last week in which a user lost over $50 million.
The incident occurred when the user attempted to swap $50.4 million in USDT for AAVE tokens via CoW Swap through Aave’s interface. Due to critically low liquidity and infrastructure failures, the transaction returned only $36,500 worth of AAVE.
Aave confirmed the user ignored multiple on-screen warnings, including a notice of “high price impact” and a checkbox acknowledging potential 100% value loss. An MEV bot executed a sandwich attack during the trade, profiting nearly $10 million.
CoW DAO, operator of CoW Swap, cited outdated gas limits in third-party solvers and possible mempool leaks as contributing factors. It acknowledged broader DeFi infrastructure remains fragile and pledged joint remediation efforts with Aave.