Key Takeaways
- A MEV bot made nearly $10 million from a crypto swap exploit involving a failed transaction that resulted in a significant loss for the trader.
- The transaction, initiated on a decentralized exchange, turned $50 million in USDT into just 327 AAVE tokens, costing the trader about $154,000 per token.
- The exploit utilized a sandwich attack, allowing the bot to profit from inflated prices by executing trades before and after the user’s transaction.
- Despite warnings about high slippage and abnormal price impacts, the user proceeded with the trade, resulting in substantial losses.
- Aave has indicated plans to return around $600,000 in protocol fees from the transaction.
A MEV bot earned nearly $10 million from a crypto swap exploit after a large token transaction executed at an extreme price. The incident involved a wallet attempting to swap over $50 million in Tether (USDT) for Aave (AAVE) tokens. Blockchain data shows the trade produced a severe loss for the trader while a bot captured a large profit.
The wallet was originally funded through Binance. It contained about $50.4 million in USDT. The owner attempted to convert the full amount into AAVE tokens using decentralized finance platforms.
MEV Bot Crypto Swap Exploit During AAVE Trade
The transaction used CoW Protocol as a decentralized exchange aggregator. The swap was routed through SushiSwap. The trader attempted to buy AAVE tokens with the entire USDT balance.
The trade produced an extremely unfavorable result. The wallet received only 327 AAVE tokens. The tokens were worth about $36,000 at the time.
Blockchain records show the user effectively paid about $154,000 for each AAVE token. The market price of AAVE was roughly $114 during the trade.
MEV Bot Sandwich Attack Generated $9.9 Million Profit
The MEV bot crypto swap exploit occurred through a sandwich attack. MEV bots monitor pending blockchain transactions in the public mempool. They attempt to profit from large trades.
The bot placed a transaction before the user’s swap. This purchase pushed the token price higher. The victim’s swap then executed at the inflated price.
The bot later sold the tokens immediately after the transaction. This strategy captured the price difference created during the trade.
To execute the plan, the bot used a flash loan. It borrowed about $29 million in wrapped Ether from the Morpho protocol. The funds were used to buy AAVE tokens on Bancor.
After the user’s swap finished, the bot sold the tokens through SushiSwap. The strategy generated approximately $9.9 million in profit.
Warnings Appeared Before the MEV Bot Crypto Swap Exploit
The trading interface displayed warnings before confirmation. The system reported extremely high slippage for the trade.
Aave founder Stani Kulechov confirmed that the interface warned about the abnormal price impact. The user approved the transaction despite the alert.
CoW Protocol also stated the interface showed the expected loss before execution.
Aave later indicated it may return around $600,000 in protocol fees generated from the transaction.
Source: https://cointelegraph.com/news/mev-bot-makes-10-million-in-crypto-swap-gone-wrong
