Decentralized lending protocol Aave plans to deploy a new feature called “Aave Shield” after a user lost roughly $50 million in a token swap.
Aave Shield, once deployed, will automatically block any swap with a price impact exceeding 25%. Users who wish to override the restriction will need to manually disable the feature in the settings menu.
“We are soon deploying a new feature, Aave Shield, which provides more protections for users who use the swap feature in the Aave interface aave.com,” the team wrote. “Aave Shield provides yet another layer of protection to prevent accidental confirmations, while maintaining permissionless operations for advanced users.”
The new initiative follows a user losing about $50 million in a single transaction. On March 12, a user attempted to swap 50,432,688 aEthUSDT for aEthAAVE using the CoW Swap router integrated into Aave’s front-end interface. However, the user received just 327 aEthAAVE worth approximately $36,400, a near-total loss.
“In this incident, the issue was an illiquid market rather than slippage. The user was quoted a price that was already 99.9% below expected market clearing value for the underlying assets of aEthUSDT and aEthAAVE due to the trade’s disproportionately large size relative to available liquidity. The unfavorable outcome was a result of the confirmed quote, not a change in price during execution,” Aave explained.
Aave said the user was shown a clear warning and required to manually confirm a checkbox acknowledging the potential for 100% value loss before proceeding. An internal audit trail confirmed the user accepted the warning on a mobile device.
Aave confirmed the protocol itself was never at risk. The team also said it collected approximately $110,368 in swap fees from the transaction. They added that they will return the amount if the user contacts the team and completes verification.
