A $50.4 million swap on the 12th of March exposed how fragile liquidity can become in decentralized finance. The trade began through CoW Swap and then moved toward a SushiSwap AAVE/WETH pool connected to Aave.
At that moment, the pool held only 331.63 AAVE and 17.65 WETH, roughly $73,000 in depth.
As the router injected 17,957.81 WETH, automated market maker (AMM) pricing pushed the curve sharply out of balance. The execution value collapsed, and the trader received only 327 AAVE, worth approximately $36,000.
Meanwhile, deeper decentralized venues processed similar flows with less than 1% slippage, highlighting a clear liquidity gap. That imbalance raised concerns about routing safeguards and user protection.
In response, Aave [AAVE] introduced Aave Shield, signaling a shift toward stronger protocol-level defenses against extreme execution shocks.
