The cryptocurrency sector can generate handsome profits, but it can also lead to significant losses, particularly in the case of often dramatic mistakes.
The latest example: a long-time ADA holder who just lost $6 million following a stablecoin USDA exchange transaction.
He exchanges $6.9 million in ADA for $847,000 in USDA
The Telegram account Investigations by ZachXBT, which brought this case to light, is already referring to it as the “on-chain clown of the month.” However, let’s assume that this kind of setback can happen to anyone in the cryptocurrency sector, which has no customer service or reverse option.
The case involves the long-time holder of a portfolio consisting of 14.4 million ADA tokens native to the Cardano blockchain, estimated to be worth $6.9 million at the time of the incident. The investment was made five years ago, at a time when the price of ADA was below $0.05.
So far, the story seems rather positive, with an unrealized gain equivalent to a 1,000% return. But things quickly went awry when the holder of these funds decided to convert them into USDA stablecoins, also native to the Cardano ecosystem.
A loss of more than $6 million
In fact, the depth of the liquidity pool associated with the ADA/USDA trading pair on the Minswap DEX was unable to meet his demand, as it only amounted to $1.9 million. As a result, the price of the USDA stablecoin rose sharply, even though it is supposed to remain pegged to the US dollar.
On-chain clown of the month: a Cardano holder exchanged 14.4 million ADA ($6.9 million) for 847,000 USDA (Cardano’s dollar-pegged stablecoin) and lost $6.05 million due to low liquidity, which caused a temporary sharp rise in price. The funds had previously been dormant for about five years.
As a result, this trader has just lost more than $6 million on this seemingly routine transaction. This serves as a reminder that rushing into things should never replace the necessary checks and balances.
