Aave to Roll Out Aave Shield After $50M User Loss Incident

Decentralized finance protocol Aave announced it will deploy a new feature called "Aave Shield" to protect users by blocking swaps exhibiting a price impact greater than 25%. This decision follows an incident last week where a user lost over $50 million attempting to swap $50.4 million in USDT for AAVE via the Aave interface using CoW Swap. The resulting trade yielded only $36,500 due to severe liquidity issues and infrastructure failures, exacerbated by an MEV bot executing a sandwich attack that profited nearly $10 million. Aave noted that the user proceeded with the transaction despite multiple warnings on the interface, including alerts about high price impact and a confirmation box acknowledging a potential 100% value loss. CoW DAO, the team behind CoW Swap, attributed the extreme price impact partly to poor liquidity and partly to infrastructure failures, such as a solver using an outdated gas limit and another solver failing to submit a better-priced transaction on time. Both Aave and CoW DAO are committed to transparently investigating the issues that led to the significant loss.

(Source：Cointelegraph)