How This Cardano Holder Lost $6.09 Million In Minutes Due To On-Chain Liquidity Issues

A Cardano holder has experienced a staggering financial blow this week, losing over $6 million worth of ADA in just minutes due to on-chain liquidity issues. The funds, which had been sitting dormant for nearly five years, vanished almost instantly during the massive swap. The incident raises alarm regarding the risks involved in using Decentralized Exchanges (DEXs) and the importance of understanding liquidity and slippage before executing large trades. 

Cardano Holder Loses Over $6 Million ADA In Minutes

A new report from a famous on-chain sleuth, ZachXBT, revealed a jaw-dropping loss for a Cardano investor. The user had swapped 14.4 million ADA, valued at approximately $6.9 million, for 847,000 USDA, a stablecoin pegged to ADA.  The transaction occurred just two hours before the report became public, revealing that the investor had lost approximately $6.05 million, wiping out more than 80% of his initial investment. 

ZachXBT has said that the dramatic loss was likely due to extremely thin liquidity in the trading pool, which caused the price of ADA to spike temporarily during the swap. Vladimir S., a threat researcher who shared ZachXBT’s findings on X from his Telegram group, speculated that the Decentralized Exchange interface where the transaction occurred probably did not provide clear, low-liquidity warnings for a swap of that magnitude. 

Vladimir suggested that an Over-The-Counter (OTC) deal would have been a much safer alternative for a $6.9 million ADA swap. Notably, this case highlights how even long-term crypto holders can suffer major losses when they do not fully understand how DEXs work.

Community Weighs In On Liquidity Issues And Slippage Warnings

ZachXBT’s report sparked extensive discussions among crypto traders and analysts, who pointed out that the $6.9 million ADA swap carried a staggering high price impact of 87.433%. Many in the community noted that the transaction was executed on the Minswap DEX, where users are required to actively acknowledge and consent to high slippage warnings to confirm trades.

Some members argued that the $6.05 million loss could have been avoided if the user paid attention to the interface and the obvious warnings displayed for transactions exceeding typical slippage thresholds. Responding to Vladimir’s speculation about a lack of clear liquidity warnings, other community members confirmed that Minswap always provides visible alerts for low liquidity swaps. Large slippage percentages, typically above 3-5%, are displayed in bright red texts, making it almost impossible for traders to miss. 

Some observers suggested that the Cardano holder may have misunderstood the interface, possibly due to language barriers or a lack of familiarity with decentralized finance mechanisms. Regardless of the reasons, this incident serves as a clear reminder for crypto users to pay attention to liquidity and slippage alerts when executing high-value swaps.