PENGU Trader Turns $10K into $3 with Pudgy Penguins Tokens

On December 17, a trader’s attempt to capitalize on the Pudgy Penguins (PENGU) crypto airdrop turned disastrous, resulting in a loss of $10,000. The token had gained immense attention, surging to a market cap of over $3 billion within hours of its debut. However, one unfortunate investor made a critical error by purchasing the PENGU token just before the airdrop, at an inflated market cap of $14 trillion.

According to on-chain data, the trader, who appeared to be trying to “front-run” the airdrop, purchased a large amount of PENGU tokens through the Jupiter decentralized exchange (DEX). However, a glitch in the platform led the trader to a low liquidity pool, causing significant slippage. The decentralized exchange’s price mechanism uses a bonding curve, which adjusts prices automatically based on supply and demand. In this case, the liquidity pool was manipulated, causing the price of the tokens to be much higher than expected.

As a result, the trader’s initial investment of $10,000 plummeted in value, turning into less than $3 within minutes. They had bought 45 wrapped Solana (wSOL) tokens worth a substantial amount, but due to the manipulated pool, they received just 78 PENGU tokens valued at less than $5. Despite the immediate loss, the trader later acquired 62,585 PENGU tokens worth approximately $2,000. However, the total loss still remained significant.

The incident highlights the risks of trading newly launched tokens, especially when using decentralized exchanges with low liquidity pools or unverified contract addresses. These “sniper” trades often take advantage of token launches by quickly purchasing newly available coins, but they can also lead to significant losses due to price manipulation or system errors.

Pudgy Penguins, the NFT project behind the token, has recently experienced a resurgence, with the collection now ranked among the top three NFT projects by market cap. Its NFTs, initially trading for as much as $60,000, had a floor price adjustment to 15.63 Ethereum (ETH) after a market correction. Iglo Inc., which owns Pudgy Penguins, has ambitious plans to further develop the PENGU token, including integrating its features into Ethereum’s blockchain and launching a layer-2 Abstract Chain network. The total supply of PENGU tokens is 88.88 billion, with seven million eligible addresses for the airdrop.

While the trader’s experience with the PENGU token is a cautionary tale of crypto trading risks, the project itself continues to gain momentum in the NFT and blockchain space.