The Telegraph
In a stroke of bad luck, a trader lost $10,000 after purchasing Pudgy Penguins’ PENGU tokens just before the NFT-linked airdrop.
It seemed like a wintry windfall, or so the unfortunate trader believed, when they attempted to front-run the Pudgy Penguins crypto airdrop on December 17. While the Pudgy Penguins (PENGU) token skyrocketed to over $3 billion in market capitalization mere hours after its launch, one investor made the mistake of buying the coin at an astonishing $14 trillion valuation.
Their original investment of $10,000 plummeted to less than $3 in just a matter of minutes, as noted by on-chain data and community observers.
From $10k to $3: PENGU trader struck by an iceberg
Based on on-chain data, an undisclosed trader seemingly executed a substantial PENGU order on Jupiter just prior to the token’s official release.
These types of traders, often labeled as “snipers,” utilize sophisticated trading tools to quickly acquire freshly launched tokens. However, a malfunction in Jupiter’s decentralized exchange inadvertently guided this aspiring PENGU sniper toward a low liquidity pool.
DEX aggregators like Jupiter compute crypto valuations through a system that modifies price tags based on demand, known as a bonding curve.
Savvy malicious actors sometimes exploit this system to generate extremely volatile liquidity pools. Since creating a liquidity position is open to anyone, traders may at times purchase tokens from incorrect contracts, leading to significant financial setbacks.
In this instance, it appears the trader unwittingly invested in one of these manipulated liquidity pools without verifying the contract address or the token’s market capitalization. After exchanging 45 wrapped Solana (SOL), the buyer ended up with just 78 tokens valued at under $5 at the time of reporting. Undeterred by the blunder, the trader ultimately accrued 62,585 PENGU coins worth approximately $2,000.
Pudgy Penguins’ roadmap
The recent launch of a token has signaled a resurgence for Pudgy Penguins amid a wider NFT revival. The NFT collection, owned by Iglo Inc., ranked among the top three NFT projects by market capitalization. At one point, a single Pudgy NFT was valued at more than a Bitcoin.
After the airdrop, the Penguin-themed blockchain art pieces traded for an average of $60,000, though a subsequent 50% correction lowered its floor price to 15.63 Ether (ETH).
Looking forward, Igloo Inc. plans to activate PENGU features on Ethereum’s blockchain and also aims to introduce its layer-2 Abstract Chain network. The total supply of Pudgy Penguins’ PENGU token is 88.88 billion tokens, with seven million addresses eligible for the airdrop.
