Mistaken Sale of Curve LP Token Causes $2 Million Loss

03/13/2023 08:01 • AI Insights • 90 views

On March 13, a user mistakenly sold the Curve LP token 3CRV with a value of more than US $2 million and only got 0.05 USDT. DEX aggregator KyberSwap published the investigation results of this event. KyberSwap said that when the user sold, only the route of 0x was successful, so KyberSwap chose the transaction path provided by 0x, which pointed to a pool with almost no liquidity, but the user did not seem to notice the reminder of the actual value of tokens obtained through the transaction and continued to trade, resulting in losses.

KyberSwap: has contacted Coinbase and others to try to recover the funds lost by the previous mis-selling of 3CRV users

Analysis based on this information:

KyberSwap, a DEX aggregator, recently released an investigation report regarding a mistakenly sold Curve LP token 3CRV that resulted in a loss of over US $2 million for the user. The incident occurred on March 13 when the user unsuccessfully traded their token and only received 0.05 USDT. KyberSwap explained that the route chosen for the user’s transaction was only successful for 0x, leading to a pool with minimal liquidity. However, the user did not heed the warning about low token value and proceeded with the trade despite the obvious risk.

The incident highlights the importance of understanding liquidity in the DeFi space, especially when trading Curve LP tokens. Curve, a decentralized exchange, is designed for stablecoins and allows users to trade and provide liquidity to various pools. Therefore, when trading Curve LP tokens, it is essential to ensure the token pool has enough liquidity to provide reasonable value for any trade. In this case, the user did not pay attention to the liquidity levels of the pool, leading to the significant loss.

Moreover, KyberSwap’s response indicates that DEX aggregators must take responsibility to guide users through liquidity concerns when trading complicated tokens. DEX aggregators such as KyberSwap can provide users with multiple routes for their trades, but they must ensure that the selected routes lead to pools with sufficient liquidity. In cases where liquidity is low, DEX aggregators should caution users about the value of their trades and suggest alternate routes.

In conclusion, the event emphasizes the need for caution and due diligence when trading in the DeFi space. It highlights the importance of understanding the intricacies of tokens, their liquidity levels, and the routes used for trades. The user in question may have been inexperienced, but it’s crucial to be informed about token liquidity levels, potential risks, and to only trade based on sound strategies. DeFi integration and automation features should also be implemented to ensure that users can only make trades within pre-set parameters to avoid catastrophic losses.

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Mistaken Sale of Curve LP Token Causes $2 Million Loss

KyberSwap: has contacted Coinbase and others to try to recover the funds lost by the previous mis-selling of 3CRV users

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