An unfortunate trader lost $10,000 after purchasing Pudgy Penguins’ PENGU tokens just before the NFT-linked airdrop.
The snow began to fall, or so a misfortunate trader believed when they attempted to front run the Pudgy Penguins crypto airdrop on December 17. As the Pudgy Penguins (PENGU) token skyrocketed to over $3 billion in market capitalization mere hours after its launch, one investor ended up acquiring the coin at an astonishing market cap of $14 trillion.
Their initial investment of $10,000 plummeted to less than $3 within minutes, based on insights from on-chain data and observations from the community.
From $10k to $3: PENGU trader hit by an iceberg
According to on-chain data, an anonymous trader seemed to have placed a substantial order for PENGU on Jupiter just before the token’s launch.
These types of traders, known as “snipers,” utilize sophisticated trading tools to immediately acquire newly released tokens. Unfortunately, a malfunction in Jupiter’s decentralized exchange routed this aspiring PENGU sniper towards a low liquidity pool.
DEX aggregators such as Jupiter determine crypto prices through a mechanism that automatically adjusts price labels based on market demand, referred to as a bonding curve.
Tech-savvy malicious actors occasionally exploit this mechanism to create extremely volatile liquidity pools. Since anyone can create a liquidity position, traders sometimes inadvertently buy tokens from erroneous contracts, resulting in substantial losses.
In this scenario, the trader likely invested in one of these manipulated liquidity pools without properly verifying the contract address or the token’s market cap. After exchanging 45 wrapped Solana (SOL), the investor ended up with just 78 tokens worth under $5 at the time of reporting. Undeterred by the mistake, the trader later managed to acquire 62,585 PENGU coins valued at approximately $2,000.
Pudgy Penguins’ development roadmap
The launch of the token marked a significant recovery for Pudgy Penguins within a broader resurgence of non-fungible tokens. 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 higher than a Bitcoin.
After the airdrop, the Penguin-themed digital art pieces averaged trading prices of $60,000, with a subsequent 50% correction adjusting their floor price down to 15.63 Ether (ETH).
Looking ahead, Igloo Inc.’s roadmap encompasses activating PENGU features on Ethereum’s blockchain. The company also aims to introduce its layer-2 Abstract Chain network. Pudgy Penguins’ PENGU token boasts a total supply of 88.88 billion tokens, with seven million addresses eligible for the airdrop.
