So, a trader just got wrecked on a DeFi platform. They saw the potential gains but honestly, was it even worth making the trade if it’s just a trap to make people lose their cash?
Even after some compensation, they ended up losing over $49 million. It’s crazy that these kinds of vulnerabilities are still lurking in decentralized finance.
His mistake was setting the slippage to enormously huge number, people thought setting slippage higher will only make their transaction smoother by sacrificing a little cost for the slippage, that couldn't be more wrong.
Low liquidity pool is a real thing and MEV bot exist. These bot are ready to borrow tens of millions from flash loan pool, pay the block builder fee to reorder transaction to frontrun you, disrupt the liquidity in the pool and sell you the coin at significantly higher rate.
For anyone out there who uses DEX and want to be safe, keep the slippage number at minimum always.
just shows how parasitic and terminally corrupt the whole ETHSOLTRONPOLYGONADASHITSHOWAAVE with its flawed architectures and smart contracts are ..
spoiler: it's not a bug, it's a feature
MEV maximum extractable value and sandwich orders etcetc are inherent features of this garbage
seems sheeple always think that it is not going to be themselves that will be fleeced, always the others in the herd, until ...
errrm.. how many ETH did Vitalik just dump? 17,000 thereabouts?
https://x.com/StaniKulechov/status/2032193345414664659
right. casually trading $50M on a ... cellphone, swiping right past those annoying prompts...
it sure did, which is to fleece each and every user, usually only so it is not quite that noticeable, while this guy was so stupid that it made a notable dent, which brings unwanted attention to the systemic bloodsucking ...
Honestly, there is a good chance that these people are just simply careless and there isn't a way to stop these people because it is not inherit to anything related to decentralized. I mean we have seen it in the centralized ones and this is why I think it is clear that we are going to see most of these keep going.
We have seen for example people pay gas fee mistakenly by a huge number and that is why it wasn't something related to crypto. Which is going to be something that will be similar here, it's enduser's mistake and that is why it is not going to be the same and it will happen.
A lot of people think this is a money laundering attempt. Well, I don't know but I think the concept of MEV is stupid and shouldn't exist. I don't see why we say that blockchain is a transparent technology but there are people that can sandwich transactions and maximally extract value from a position of little to no value. If I ever get this size of liquidity, I might not use it in crypto because of this.
Losing $49m+ from simply making a crypto transaction is insane no matter how they try to justify it. $50m is a lot of money that more than 95% of the world population will never touch in their lifetime.
Isn't there a percentage slippage shown before executing a trade, why is this user seem to be different, is it because the system has programmed to behave abnormally when bigger amount of money is bee sensed.
From the article, the team promised to return $600k to the victim, what for?
What happened to the whole $49m, where has it gone to that it can't be returned back.
Why the set percentage slippage does not correlate with the amount, but misbehave when such amount wanted to stake. All these DeFi platforms are liars and looters.
Some of the money went to MEV and some other went to the block builder. It's basically like a free lunch for MEV when you don't set slippage correctly.
Everyone of them will try to front run you and as a result you got nothing left. Titan Builder got $34m and AAVE reimbursement is out of good will and they only got that 600k which they refunded.
That theory crossed my mind as well, as it's way more likely scenario then someone being clumsy AF, even though it's possible an you couldn't really prove otherwise, unless you connect that money again to person who was clumsy. I find that low effort money laundering was more hilarious, like selling millions of dollars worth of garbage NFTs that are pictures of low quality rocks.
I wonder if trump exchange is going to do something similar, as it's believable that they would "lose" money because of incompetence.
I miss the times of "I lost all my Monero in a boating accident".
None of these things used to matter in the past. You just needed to put around 150k to 200k gas limit on MEW wallet then and that would be the only thing you have to check for before broadcasting your transaction. These days, if you're not careful enough you'll lose much more from a simple transaction that gets executed on the blockchain. If it was not really money laundering, such loss will leave a bad taste in the month of the user and other big guys that wanted to come to crypto to play won't do so anymore.
To be honest, I think that many users of these defis don't even understand what a slippage is. So, they think that pulling the trigger to higher number makes them think that the trade will be even easier at no cost.
It is truly insane, I mostly thought of these incidents as money laundering. But if dived down to what actually happened, it lies down to their negligence.
One hundred percent spot on and yep, some people thought slippage as just some random number while in fact its the only thing that prevent us from losing our money when swapping.
The problem is the DEX never bothered to explain the slippage and only gives some small warning toast notification and thats it.
Back then using pretty high slippage was not a problem at all, we're still getting the amount we expected but right now there are tons of extractors lurking on the shadow to rob us off our money through sophisticated method.
Even going as far as paying tons of money to block builder for reordering.
As I've used it before, there's a little (!) of explanation of what it is but it is not concise and whoever reads it won't mind adjusting it to the highest. So, there's also a likelihood that they're doing it with intention of chances of new users to just increase it as much as they can. It was a long time since I've used one defi and learning that these happens is because there's really a loophole on what they provide to their users.
That incident, if we look at it, seems like a very brutal rape of a rich person's money, just like that, as if the funds were stolen. Now, according to my research, AAVE also gave a warning that the transaction he was going to enter was suspicious; they also gave the person an alert several times.
And despite the reminders, the transaction that was made was still continued. What the person who made the transaction did not know was that there were bots or arbitrage traders waiting
I don't know the exact term, that the money was immediately celebrated when it was swapped in that protocol. So after these events, there is really no chance of recovering the 50 million dollars, even though the deal was still good because they still refunded the $600k in fees deducted from the transaction, if I am not mistaken in this matter, unlike the 50 million dollars that was swapped, the value of which was only $36,000.
If this slippage should cause problems in many investors staking proposals, it would've been more better for the programmer to develop in such a way that the system will remind the investor to confirm if the slippage set is convenient or not, to confirm that several times before approval. Something like;
"Confirm the slippage percentage and the amount charge before proceeding"
Similar reminder should pop up like three times in different appearance to avoid mistakes in future.
For what I know those Defi platforms actually have that feature on which user will confirm the slippage they set especially high.
Maybe that user is just overconfident that he won't made a mistake, but late to realize that confidence put them on high risk since he already lost lots of money for that mistake he made.
Its unfortunate situation to lose money in that way and that serves a huge lesson not only for him, but also those people read the story about what happen to him to also check their transaction made to avoid experiencing such expensive mistake.
Every defi already have that if I'm not mistaken, even AAVE founder confirmed that the user is pressing the confirm button on that slippage warning. But user being user, they just clicked the confirm button without any care and most certainly expecting nothing to happen.
At this point, it is better to have a hardcoded guard measure to reject the transaction if the slippage is going past 20% because i'm pretty sure nobody here on earth want to lose that much money when swapping.
I feel like this is not the best approach. I saw AAVE founder publicly claiming that they executed the user's swap at the best possible price. Swapping $50m to < $50k is not normal in any circumstances. Even in traditional finance, it's just not possible. Maybe this is one of the reason why DeFi haven't had solid growth in the last few years because in addition to poor security across defi protocols, you can also lose shit ton of money from from doing a basic swap onchain.
Someone has experienced this before too, they took responsibility for their lack of knowledge, he agreed that he has not done a large amount of transaction like that before and since he has swapped only smaller amounts, he just believed that the thing was going to be successful too but he lost a huge amount. What I learned from his experience is that, if I'm dealing with a huge amount, I prefer to divide the amount and do the transaction bit by bit. It's better to pay multiple gas fee than to lose a very huge amount like that.
This is the reality most probably. People are careless and there are millions of people who are using crypto, so eventually some of them will make this kind of mistakes and it is not really that complicated to see these type of things, it is very common and happens all the time. We just need to realize it doesn't happen all that often and we have to see that people out there will continue to do these mistakes because it's too many people and eventually one of them will.
I am not using any DEX these days and these slippage and keeping it at the possible minimum and MEV bot kind of things are completely new and too complex to follow and understand the real time impact of these. Still, I learned few things here today like I need to be careful if I happen to adapt any new tokens and especially when dealing with DEX.
Based on that news its basically a user fault because no matter how big the Decentralized App they still struggle with the liquidity especially if you come too Decentralized Finance, AMM and Dex Aggregator.
First because so many AMM today and with their own coding and liqudity so if people trying to swap big amounty like that we need to double check everything although now there is AMM like CoWswap and the other trying to stop MEV Bot.
We need to double check everything especially when it comes to big money like this because everything cant go wrong, I have case that actually happen to me, in total I might have token that worth mabybe 300 USD, I know its small for some people, but the reason why Im losing my money because the DaPP itself, I lose it because the platfrom that I deposited got hacked and money cant go back.