Dormant Cardano wallet loses millions in botched token swap
Dormant Cardano wallet loses $6M swapping ADA for stablecoin
- A Cardano wallet inactive since 2020 swapped 14.4 million ADA for an obscure stablecoin (USDA) and instantly lost over $6 million due to extreme slippage and illiquid trading pools.
- The transaction, flagged by investigator ZachXBT, spiked the price of USDA far above its peg, meaning the user received a fraction of the expected stablecoin value.
- Analysts note the event highlights serious risks of executing large crypto trades in low-liquidity markets without slippage controls; such mishaps have become cautionary tales in crypto.
A dormant Cardano wallet executed a large cryptocurrency swap that resulted in a loss of millions of dollarsblockchain investigator ZachXBT due to low liquidity conditions, according to on-chain data reviewed by blockchain investigator ZachXBT.
The wallet, identified as addr1qy…d5r4x534, conducted its first transaction since September 2020, swapping a substantial holding of Cardano (ADA) tokens for a Cardano-native stablecoin. The holder received significantly less than the expected market value of the tokens, according to blockchain data.
The transaction was routed through an illiquid pool, causing the large order to distort the local price of the stablecoin, data showed. The stablecoin briefly spiked to an elevated on-chain price before correcting back toward its intended peg, while the wallet holder received substantially below the expected conversion value.
The loss resulted from two factors, according to blockchain analysts: the swap occurred in a pool with insufficient liquidity to support the order size, causing immediate price dislocation; and the transaction involved a lesser-known stablecoin pair with limited trading volume, where large trades can trigger significant slippage.
Blockchain dashboards confirm the wallet’s token balance dropped to zero following the transaction, with the holder receiving a reduced amount of stablecoin that represented a realized loss of millions of dollars. The stablecoin’s rapid price spike appeared to have been caused, at least partially, by the transaction itself, according to on-chain analysis.
The incident highlights risks associated with executing large orders in illiquid markets, according to cryptocurrency analysts. Large transactions typically require division into smaller batches and execution in pools with adequate liquidity depth to minimize price impact, analysts said.
The wallet had remained inactive for approximately five years before the transaction occurred. The loss represents one of the largest single-transaction losses recorded on the Cardano blockchain, according to blockchain data.
