- A Cardano user lost approximately $6 million due to a trading slippage error.
- The user traded 14.4 million ADA tokens for the stablecoin USDA but received only about $847,000 worth of USDA instead of $7 million.
- The USDA stablecoin’s price briefly spiked to over $4.84 per token after the trade.
- The loss occurred because of low liquidity in the trading pool on the Cardano decentralized exchange Minswap.
- The user’s transaction was their first interaction with a DeFi protocol on Cardano despite holding ADA for over five years.
On Sunday, an unidentified Cardano user attempted to swap 14.4 million ADA tokens, worth just under $7 million, for USDA, a stablecoin pegged to the U.S. dollar. Instead of receiving the expected value, the user obtained only about $847,000 worth of USDA tokens. This significant discrepancy was caused by low liquidity in the decentralized exchange pool where the trade was executed, according to ZachXBT, who initially identified the transaction.
In decentralized finance (DeFi), slippage refers to the difference between the expected price of a trade and the actual execution price, which can worsen when trading occurs in pools with limited liquidity. Such low liquidity can lead to large price swings, as seen when this trade momentarily pushed the USDA stablecoin’s value to over $4.84 per token, according to CoinGecko data.
The affected user’s wallet held their ADA tokens for more than five years but had not engaged with any DeFi protocols on Cardano before this trade. USDA is a Cardano-native stablecoin supported by U.S. dollars and dollar-equivalent assets, including short-term U.S. government bonds. It is a collaboration between Encryptus, Emurgo (Cardano’s business arm), and BitGo Trust.
Since its launch on the Cardano decentralized exchange Minswap in March, USDA adoption has been limited. Data on Minswap shows the ADA-USDA pool handles roughly $30,000 in daily trading volume. The current liquidity pool holds about $963,000 in USDA and a similar amount of ADA, although the exact liquidity at the time of the trade is not known.
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