To complete this trade, 1inch decided the best route to go through was Sushiswap’s pool, which only had $200 of liquidity.
Imagine getting $100 worth of token for your $83k USDT.— SiegeRhino (@SiegeRhino2) April 30, 2021
No, he didn't even get frontran. Actually his tx is first in the block.
He just bought through @1inchNetwork who somehow thought the best execution should go through a Sushi pool with $200 of liquidity.
Don't use 1inch. pic.twitter.com/Hs2Lfwmw3J
In the Twitter thread, 1inch responded, saying they are going to refund the user’s mistake. They also mention they will add more “big warning” so this situation doesn’t happen again.
1inch foundation is gonna refund this user mistake. The dApp contributors are going to add an additional (third) big warning ⚠️ and restrictions to avoid such cases. Pathfinder delivers right rates as it was before!— 1inch Network (@1inch) May 1, 2021
After some digging, Twitter users were able to find the apparent trader. In a message, the trader said, “I used @1inchNetwork to buy $DIGG initially at 1.59. But @1inchNetwork routing sent me to ETH, but there was no depth. $DIGG is a BTC pool, and there’s no depth in ETH. So I first changed 30 ETH and then 0.0019 DIGG. When I swapped, it indicated 1.59, but the final transaction was 0.0019.”
According to the trader, there was no slippage involved. This caused SiegeRhino to respond to 1inch, saying that if the trader’s message is valid, this was not a user error but an error on 1inch’s side.
https://t.co/UO73BMyKVY— SiegeRhino (@SiegeRhino2) May 1, 2021
I don't know how truthful this guy is as he might be trying to cover up his own mistakes, but apparently he did get announced that he was about to receive 1.59 DIGG, so no particular slippage. That would mean warnings wouldnt help.
To make this situation even worse, a bot was able to run off with the loot. This Twitter thread explains what happened to the $85,000.
On a side note, after this txn was included into the block(#12343171), there's immediately a txn from the mining pool capturing the #MEV($85,644.25) with 1 wei gas. It looks bots deployed at mining pool side are very mature in gaining arbitrage opportunities. Txns are below. https://t.co/1nYbdSJaxP pic.twitter.com/unMMNZhEXT— YQ (@yaoqijia) May 1, 2021
It is unclear at the moment what was the cause of this situation, but one thing is for sure this shouldn’t be happening on such a big DEX aggregator. Some questions have come up: If this was a user error, should the trader have been refunded even after multiple errors? If this wasn’t a user error, then how come 1inch’s route was so bad? Is this a pattern we are going to see in the future?