USDC panic tragedy! A slip of the hand exchanged 2 million euros for 0.05 USDT

The Twitter account @BowTiedPickle shared a "tragedy" caused by the USDC panic.

The Twitter account @BowTiedPickle shared a "tragedy" caused by the USDC panic.

A user sold $2.08 million worth of 3RV LP tokens, which are Curve liquidity pool tokens containing DAI/USDC/USDT, using the aggregator KyberSwap, but ended up receiving only 0.05 USDT in return.

@BowTiedPickle explained that the rationale behind this trade is questionable. The user only needed to provide the 3RV LP tokens with a 6% slippage tolerance, but perhaps the user was too impatient. In their rush to exchange, they forgot to set the slippage correctly and executed the trade.

Another character in the story is the "0x7d36fbd3" in the UniswapV2 pool, providing liquidity for 3CRV/USDC. This pool had only $2 worth of liquidity and had been untouched for the past 251 days.

When the $2 million worth of 3CRV LP tokens were applied to Uniswap's pricing formula x * y = k, tragedy struck.

Due to the severe imbalance in this liquidity pool, MEV bots swooped in to claim the transaction. They spent $45 on Gas Fees and a MEV node bribe of $39,000, ultimately acquiring $2.045 million. The bot was not complex, only involving backrunning, flashbots, and unwrapping 3CRV LP tokens.

@BowTiedPickle stated that this incident was the result of a double mistake. The first being the user's failure to correctly understand and set the slippage, and the second being KyberSwap's trade path through an unused UniswapV2 pool for a transaction exceeding $2 million. With only $2 in liquidity, the MEV bot was not intentionally triggered but merely clearing the trade.

Subsequently, KyberSwap also issued a response, stating that the system had already warned of such abnormal trade results, but the user chose to proceed. They will improve the interface to provide better warnings and distinctions.