Check your transactions: $50M DeFi mishap reveals a costly UX flaw
In the experimental world of decentralized finance (DeFi), another hard lesson was learned, as someone confirmed a transaction that cost them $50 million even after a warning.
It happened on the major DeFi platform Aave, when the person, for some reason, confirmed the transaction, swapping around $50 million in tether (USDT) stablecoin for only 324 AAVE tokens, worth $37,260 at the time of writing.
According to Aave founder Stani Kulechov, the user accepted a quote with a high price impact despite being warned.
"The transaction could not be moved forward without the user explicitly accepting the risk through the confirmation checkbox," he said, adding that systems, including third parties such as decentralized exchange (DEX) aggregator CoW Protocol, "functioned as intended."
"No DEX, DEX aggregator, public liquidity pool, or private liquidity pool (or combination thereof) would have been able to fill this trade at anywhere near a reasonable price," the team behind CoW said.
Now, both Kulechov and CoW admit that "there are additional guardrails the industry can build to better protect users" and that "trades like these show that DeFi UX still isn’t where it needs to be to protect all users."
Meanwhile, commenters online are wondering how this was allowed at all, pointing to the fact that warnings could be less cryptic and more straightforward.
"Rather than simply check a box, anything over 90% slippage should require a user to type 'I willingly accept I am about to lose all of my funds,’" @FaucisBeagles said.
While the DeFi industry is "investigating ways to improve these safeguards going forward," Kulechov also said they'll try to contact the user in order to return $600,000 in fees collected from the transaction.
The CoW team also said they'll return the fees collected from the unfortunate transaction.
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