Panic sell USDC: how a trader lost $2 million
In a frantic attempt to swap two million USDC for USDT, a trader only got back five cents.
In a frantic attempt to swap two million USDC for USDT, a trader only got back five cents.
A Twitter user analyzed on-chain data and saw that an unfortunate trader lost two million during a stablecoin swap. According to the user, the unlucky trader aimed to convert roughly 2 million US dollars worth of the stablecoin to USDT during the USDC depeg, but he only got 5 cents back.
The reason for the huge price discrepancy was possibly a combination of his own inattention and the unusual MEV-bot procedure. The swap occurred on Kyber-Network's DeFi protocol, which used a liquidity pool from Uniswap.
Because the trader apparently panicked during the sell-off, he rushed to swap his stablecoins. In doing so, he forgot to set his slippage correctly. This would probably have prevented the swap otherwise.
Slippage happens when prices swing between initiation of a transaction and its execution. The result is uncontrollable price losses during the swap, but they can be avoided by setting a certain percentage.
