A five-year Cardano holder accidentally lost more than $6 million in ADA after utilizing an illiquid trading pool for a stablecoin swap.
The transaction, initially highlighted by blockchain investigator ZachXBT on Sunday, involved the swap of 14.4 million Cardano (ADA) tokens, valued at $6.9 million, for 847,695 of the US dollar Anzens (USDA) stablecoin. This resulted in a substantial loss of approximately $6.05 million.
The Cardano user, whose wallet address is "addr…4x534," appears to have executed a test transaction of 4,437 ADA for a US dollar stablecoin with the ticker USD at 4:06 pm UTC on Sunday. This test occurred just 33 seconds before the significant swap to USDA.
Prior to this transaction, the Cardano wallet address had remained dormant since September 13, 2020.
The Importance of Liquidity in Crypto Swaps
This incident underscores the critical importance of conducting cryptocurrency swaps within liquid pools, especially for large orders that can significantly influence market prices. Using illiquid pools can lead to unfavorable execution rates and substantial losses.
The transaction appears to have contributed to a temporary surge in ANZA's price, reaching nearly $1.26 before settling back to $1.04 at the time of reporting, according to CoinGecko data.
Was it a Fat-Finger Error?
It remains unclear whether the Cardano user intended to purchase the relatively obscure stablecoin, USDA, which has a market capitalization of only $10.6 million.
Blockchain data indicates that this was the first time the crypto trader had held the USDA stablecoin prior to this transaction.
"Fat-finger" transactions, where a typo or accidental input leads to an incorrect trade, can have a significant impact on cryptocurrency markets.
In a separate incident last month, stablecoin issuer Paxos mistakenly minted 300 trillion units of the PayPal USD (PYUSD) stablecoin before burning the entire amount approximately 22 minutes later.