TechFlame News: Aave Releases Post-Mortem Analysis of Swap Incident A user executed a token swap via the CoW Swap router integrated into the Aave interface. The user attempted to exchange 50,432,688 aEthUSDT (worth approximately $50.4327 million) for aEthAAVE. Due to the unusually large size of the user’s order in an illiquid market, CoW Swap provided an extremely unfavorable quote, which the user confirmed and accepted. It is important to note that the Aave protocol itself was never at risk, as the swap occurred off-protocol through the aforementioned third-party swap service. At present, the user involved has not yet contacted the Aave team. The key issue in this incident was market illiquidity, not slippage. Illiquidity refers to a situation where there are insufficient assets available at a specific price in the market to fulfill a large order, resulting in a severe deviation from the expected price. The user’s order far exceeded the available market liquidity, and the quote provided by CoW Swap was already 99.9% lower than the expected market clearing price. The unfavorable outcome stemmed from the user confirming the quote, rather than price fluctuations during execution. The root cause of this incident was the routing of a large transaction in an illiquid market, leading to extreme price impact. The user proceeded with the transaction after acknowledging explicit warnings on the interface. To prevent similar incidents, Aave Shield will be introduced in the Swap widget: by default, it will block swaps with a price impact exceeding 25%. Users will need to manually disable this feature to proceed with high-risk transactions. The transaction generated approximately $110,368 in fees, which will be refunded upon user verification.