MEV Bot Sandwich Attack Swallows $50M DeFi Trade

A recent DeFi transaction highlights the issue of MEV extraction and slippage in cryptocurrency markets. A user attempted to swap $50.4 million USDT into AAVE tokens via CoW Protocol and SushiSwap, but was exploited by a MEV bot sandwich attack.

The MEV bot scanned pending blockchain transactions and spotted the massive order before it executed. It then flash-borrowed funds to buy AAVE on Bancor, driving up the price ahead of the user's trade. When the user's transaction executed on SushiSwap at the inflated price, the bot immediately sold its AAVE holdings back into the market.

The technique is called a 'sandwich attack' because the bot places one transaction before and one after the victim's trade. The user got squeezed in the middle, paying inflated prices while the bot extracted value from both sides of the trade.