A long-dormant Cardano (ADA) whale burned over $6 million in a single transaction, aiming to convert 14.4 million ADA—valued at approximately $7 million—into USDA, a stablecoin specific to Cardano. The swap, executed in a low-liquidity environment, resulted in the account retaining only 847,000 USDA, reflecting an 87% loss and prompting concerns regarding the DeFi infrastructure of Cardano.

The Costly Transaction

On-chain analyst ZachXBT noted that the wallet had been inactive for about five years prior to this swap. According to him, this transaction caused the price of USDA to soar beyond its intended peg due to limited liquidity. The swap’s specifics reveal that the user ended up with approximately 847,694 USDA, leading to a monetary loss around $6.2 million. Screenshots shared by community member $DeFiPunk illustrate the DEX interface alerting users of significant price impacts, as the user even had to accept a ‘high price impact’ warning before proceeding.

Opinions within the Cardano community diverge. Some, including Charles Hoskinson (Cardano’s founder), labeled it as either reckless or just an unfortunate blunder from a less experienced trader. Others argue it was possibly intended to shine a spotlight on the liquidity issues prevalent within the ecosystem.

Market Pressure and Ecosystem Demands

This incident continues a trend of market challenges facing Cardano, highlighted by previous recordings of whales shedding 4 million ADA within a week, leading to increasing bearish sentiment. A spike in acquisitions has been observed as some major holders are starting to accumulate more ADA during price drops, indicating a potential for recovery if prices can stabilize above the $0.50 mark.

The incident has also heightened discussions surrounding the necessity for increased stablecoin liquidity within the Cardano network, as many believe substantial demand exists whether the infrastructure adequately supports it or not.