A Cardano whale sold ADA against USDA, incurring millions in losses due to low liquidity.A Cardano whale sold ADA against USDA, incurring millions in losses due to low liquidity.

Cardano whale loses $6M+ moving five-year-old ADA stash

A long-term Cardano holder absorbed millions in losses after attempting a DEX swap. The trader caused massive slippage, only receiving a fraction of the ADA value. 

A Cardano whale missed out on millions in profits after attempting a swap through the decentralized Minswap exchange. Instead of locking in up to $6.9M, the sale caused slippage due to the low liquidity on the exchange. 

The whale attempted to swap ADA for one of Cardano’s native stablecoins, USDA. Instead of receiving the expected dollar amount, the swap returned only 847.69K USDA. Other data showed the Cardano wallet had an unrealized profit of up to $7.2M.

The whale accumulated ADA during the post-pandemic bear market, and the coins were untouched for five years. Currently, ADA trades at $0.49, still a significant gain from the 2020 levels below $0.10. 

Cardano seller was a long-term whale

The history of the Cardano whale wallet showed that the ADA was initially received from the project’s genesis wallets. The wallet was linked to previous token rotations from older addresses. 

The whale also used the ADA for delegation, locking it with various Staking Pool Operators (SPO). The strange transaction caused speculations about mistaken order size or even a deliberate move. It also remains unknown whether the funds were hacked, though ADA can be swapped on much more liquid markets. 

USDA, the token now held by the whale, is also relatively illiquid. To swap into more liquid tokens, the whale would have to use PancakeSwap. 

Cardano chain exposed for low activity

The ADA sale did not use any additional tools such as aggregators or automated tools. The Cardano network still lags in terms of DEX activity and available tools. The low liquidity on the USDA pool also exposed the lack of liquidity providers. 

At one point, ADA tokens on Minswap rose as high as $4.84, limiting the amount received for swapping. ADA still has highly liquid decentralized pairs, with over $441M liquidity available on Solana through the USDC pair. 

Cardano only carries around $225M in liquidity, spread across relatively small DeFi apps. The Minswap decentralized exchange only carries around $56M in all its liquidity pools, lagging behind DEX protocols on other chains. Despite Cardano’s attempt to catch up on Web3 and DeFi, even its leading decentralized exchange showed insufficient liquidity pools. 

Additionally, the whale did not use any type of strategy when trying to swap. The automated pool trading offers a one-click trade, but this also comes with risks of not receiving the best possible price. 

The USDA stablecoin is mintable, although access is limited to a select number of US states. USDA can be minted through a wallet. USDA tokens can be minted against ADA collateral, meaning the whale did not even have to go through a DEX to swap to USDA. 

However, USDA also carries risks, including an expanding supply through permissionless minting. USDA swaps are also limited to a handful of pools, and the asset is not represented on centralized exchanges.

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