$6.9M ADA Lost in Illiquid Stablecoin Swap Error

A five-year Cardano holder accidentally torched more than $6 million in ADA after using an illiquid trading pool to facilitate a stablecoin swap. The trade, first noted by blockchain sleuth ZachXBT on Sunday, saw 14.4 million Cardano (ADA) tokens worth $6.9 million swapped for 847,695 of the US dollar Anzens (USDA) stablecoin, resulting in a loss of approximately $6.05 million. This represents one of the most significant single-transaction losses in recent Cardano DeFi history, demonstrating how quickly fortunes can evaporate in decentralized finance.

The transaction details reveal the stark reality of the error: the holder received only $847,695 worth of USDA stablecoin for their $6.9 million ADA position. This represents a loss of approximately 88% of the original value in a single trade execution. The incident serves as a sobering reminder that while DeFi offers unprecedented financial access, it also carries substantial risks that can lead to catastrophic financial outcomes when proper precautions aren’t taken.

The Cardano user — with wallet address ‘addr…4×534’ — appeared to make a test transaction of 4,437 ADA for a US dollar stablecoin with the ticker USD at 4:06 pm UTC on Sunday, just 33 seconds before the multimillion-dollar swap to USDA. This test transaction, while prudent in theory, failed to prevent the subsequent massive loss, suggesting that either the user misinterpreted the test results or encountered unexpected slippage when scaling up to the larger trade size.

The rapid succession between test transaction and main swap—merely 33 seconds—indicates the user may have been operating under time pressure or failed to properly assess the liquidity conditions of the trading pool. In traditional finance, such large orders would typically be executed through multiple smaller transactions or using limit orders to control price impact, but the decentralized nature of this swap allowed the entire position to be routed through a single illiquid pool with devastating consequences.

The incident underscores the critical importance of liquidity assessment in decentralized finance operations. The trading pool used for this ADA to USDA swap was described as ‘highly illiquid,’ meaning there weren’t enough counterparties to absorb such a large order without significant price impact. When substantial trades occur in illiquid pools, the automated market maker algorithms that power DeFi exchanges can create extreme slippage, resulting in traders receiving far less value than anticipated.

This case involving the little-known USDA stablecoin from Anzens highlights another layer of risk: the proliferation of new stablecoins and tokens in the DeFi ecosystem. While established stablecoins like USDT and USDC typically have deep liquidity across multiple exchanges, newer entrants like USDA may only be available through limited trading pairs with minimal liquidity. The Cardano holder’s mistake demonstrates how even experienced cryptocurrency investors can fall victim to these liquidity traps when navigating the complex DeFi landscape.

The role of blockchain investigators like ZachXBT in identifying and publicizing such transactions has become increasingly important for market transparency and user education. By documenting these catastrophic errors, the crypto community can learn from others’ mistakes and develop better practices for navigating decentralized exchanges, ultimately making the ecosystem safer for all participants while maintaining the permissionless nature that makes DeFi revolutionary.