Cardano Veteran Trader Burns $6M in ADA After Costly Low-Liquidity Swap

Quick Breakdown 

• Dormant Cardano wallet loses over $6M in ADA due to severe pool slippage.
• Swap caused short-term price distortion in ANZA-related stablecoin markets.
• The incident highlights the importance of DeFi risk management and liquidity checks.

Five-year inactive wallet loses millions in one move

A dormant Cardano wallet resurfaced on Sunday, triggering a devastating on-chain error that resulted in the loss of more than $6 million in ADA after executing a swap through an illiquid decentralized trading pool. The wallet, which has been inactive since September 2020, exchanged 14.4 million ADA valued at $6.9 million for only 847,695 USDA stablecoins, leaving the holder with an estimated $6.05 million loss.

The movement was first spotted by well-known blockchain investigator ZachXBT, who shared details of the unexpected transaction.

Test swap gone wrong

On-chain records show the wallet conducted a small test trade of 4,437 ADA about 33 seconds before executing the massive swap. Both transactions targeted the stablecoin market, but the user appears to have misjudged or overlooked pool liquidity, resulting in catastrophic slippage.

The trade instantly pushed USDA’s on-chain value to nearly $1.26 before correcting back toward $1.04 according to CoinGecko data, indicating that the order size dramatically distorted pricing.

It remains unclear whether the wallet owner deliberately sought USDA or mistakenly confused it for another stablecoin, especially as their wallet history shows no prior interaction with USDA.

The incident has drawn comparisons to recent high-profile fat-finger mistakes, including Paxos briefly minting 300 trillion PYUSD last month before reversing the error.

DeFi lesson: liquidity matters

The event serves as a stark reminder that liquidity is as vital as asset choice, particularly for large-volume traders in decentralized finance. Trading experts warn: Never push large orders through small pools; split, route, or bridge instead.

Meanwhile, Cardano is at a critical crossroads as it seeks to redefine its role in the cryptocurrency market by focusing on Bitcoin-based DeFi, even as it faces significant governance challenges.

Despite notable technological progress with projects like Leios, Hydra, and the Midnight Glacier Drop, Cardano has struggled to convert these innovations into widespread adoption or sustained market enthusiasm.

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