The cryptocurrency sector can generate substantial profits, but it is also the source of significant losses, particularly in cases of often dramatic mistakes. The latest example: a long-time ADA holder who just lost $6 million following a stablecoin exchange for USDA.
He traded $6.9 million in ADA for $847,000 in USDA
The Telegram account Investigations by ZachXBT, which first brought this case to light, is already calling it the “on-chain clown of the month.” Let’s assume, however, that this kind of setback can happen to anyone in a cryptocurrency sector that has neither customer service nor a way to reverse a transaction.
At the center of the story is the long-time holder of a wallet containing 14.4 million ADA tokens native to the Cardano blockchain, estimated to be worth $6.9 million at the time of the incident. This investment was made five years ago, back when the price of ADA was trading below $0.05.
Up to this point, 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 the USDA stablecoin, also native to the Cardano ecosystem.
A loss of over $6 million
In fact, the liquidity pool associated with the ADA/USDA trading pair on the Minswap DEX was unable to meet the demand, as it amounted to only $1.9 million. As a result, the price of the USDA stablecoin spiked sharply, even though it is supposed to remain pegged to the USD.
On-chain clown of the month: a Cardano holder traded 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 sharp temporary spike in the price. Previously, the funds had been dormant for about five years.
Details of the ADA-to-USDA stablecoin exchange
As a result, this trader has just lost over $6 million on this seemingly routine transaction alone. A reminder that haste should never replace necessary due diligence.
