The cryptocurrency sector can generate substantial 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 exchange involving USDA.
He exchanged $6.9 million worth of ADA for 847,000 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 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. This investment was made five years ago, back when the price of ADA was trading below $0.05.
So far, the story seems fairly positive, with an unrealized gain equivalent to a 1,000% return. But things quickly went awry when the holder decided to convert these funds into the USDA stablecoin, also native to the Cardano ecosystem.
A loss of over $6 million
In fact, the liquidity pool for 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 U.S. 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 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 more than $6 million on this seemingly routine transaction alone. This serves as a reminder that haste should never replace the necessary due diligence.
