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Cardano News Update: DeFi Faces $6M Setback as Low-Liquidity Pools Consume Major ADA Trade

Cardano News Update: DeFi Faces $6M Setback as Low-Liquidity Pools Consume Major ADA Trade

Bitget-RWA2025/11/17 07:14
By:Bitget-RWA

- A dormant Cardano wallet lost $6M via extreme slippage in an illiquid USDA stablecoin pool, spiking its price to $1.26. - The trade exposed risks of large swaps in underfunded pools, flagged by on-chain investigator ZachXBT as a "textbook" liquidity trap. - USDA's $10.6M market cap couldn't absorb the 14.4M ADA swap, costing traders $8 per token and wiping $6.05M in value. - The incident highlights DeFi's slippage risks, with analysts urging better safeguards for high-risk trades on decentralized exchang

An inactive

wallet owner made a catastrophic trade last week, suffering a loss exceeding $6 million in a single swap due to severe slippage in a low-liquidity stablecoin pool. The event, initially reported by on-chain analyst ZachXBT, draws attention to the dangers of executing large transactions in liquidity pools with insufficient funds and has over slippage controls within decentralized finance (DeFi) platforms.

The individual, whose wallet had not seen activity since September 2020,

—worth about $6.9 million at the time—for 847,695 USDA, a stablecoin on Cardano pegged to the U.S. dollar. This transaction temporarily pushed USDA’s price on Cardano-based decentralized exchanges, far above its $1 target. As a result, the user effectively paid more than $8 for each USDA, .

The swap took place in a pool that lacked the necessary liquidity to accommodate such a large order. With a market cap of only $10.6 million, USDA

, causing a dramatic price swing.
Cardano News Update: DeFi Faces $6M Setback as Low-Liquidity Pools Consume Major ADA Trade image 0
This situation highlights the significant risks of conducting market-style swaps in pools with limited liquidity, especially for substantial amounts. " why traders tend to steer clear of illiquid pools," commented one analyst, pointing out that even a few million dollars’ worth of can destabilize such markets.

The wallet involved had never previously held USDA,

the trade was deliberate or the result of an error or confusion with other stablecoins sharing similar tickers. Cardano’s ecosystem includes several USD-pegged tokens, increasing the risk of accidental swaps. The wallet’s prolonged inactivity also of the current liquidity situation on the network.

This USDA transaction comes amid a broader decline in Cardano’s ADA token,

this week to around $0.52. Technical signals, such as negative funding rates and a drop in Total Value Locked (TVL), . The episode could , especially as derivatives markets show increased short interest.

Market observers have stressed the need for thorough slippage and liquidity checks before executing large trades. "

that even dormant funds are vulnerable to today’s liquidity pitfalls," a DeFi analyst remarked. There is growing pressure on platforms to provide clearer alerts for trades with high slippage, though .

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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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