Pudgy Penguin’s Token Launch: PENGU

The launch of Pudgy Penguin’s Solana-based token, PENGU, has resulted in significant profits for many investors. Just two hours after its debut on Tuesday, the token reached a fully diluted market capitalization of over $3.5 billion, with more than $290 million in trading volume.

In essence, the PENGU launch represents “free money” for fans and speculators of the Pudgy Penguin NFT series. However, not all participants profited from this event.

Unfortunate Trading Experience

On-chain data revealed a sad scenario where a trader, aiming to profit from the airdrop, turned $10,000 into less than $5 in mere seconds. Just five minutes before the token’s launch at 12:54 UTC, he swapped over 45 wrapped Solana tokens for PENGU tokens. Due to a quirky mechanism in the decentralized exchange aggregator Jupiter, this trader ended up with only 78 PENGU tokens, valued at less than $3 at the time.

The unfortunate trader likely discovered the PENGU token address before the official launch. Often synonymous with fast trading, such individuals, dubbed “snipers,” utilize automated trading bots to capture the lowest prices right after an airdrop.

Low Liquidity Leads to Errors

Since his trade occurred before PENGU’s official release, it was routed to an unofficial PENGU liquidity pool on Raydium, causing him to encounter inflated prices due to low liquidity. At the point of the transaction, PENGU’s market cap was artificially inflated to $14 trillion due to its limited supply.

Decentralized exchanges utilize a “bonding curve” to raise prices as demand increases. Low liquidity, however, can result in erratic price movements and slippage, where the trade price diverges from the anticipated market value.

While it’s suspicious that someone capitalized on a liquidity position ahead of the official PENGU airdrop, it was noted by multiple sources that the actual PENGU tokens and contract were created weeks in advance.

A Cautionary Message for Traders

Interestingly, Jupiter warned users the night before the launch about possible scams, urging them to wait for the official release. Despite the mishap, the trader proceeded to make several legitimate purchases and now owns approximately 62,585 PENGU tokens worth around $2,000.

Moreover, traders should note that Solana’s infrastructure can easily foster counterfeit token versions. A simple search on SolFlare reveals multiple unverified tokens sharing the ticker PENGU, often existing to deceive unsuspecting traders.

Additionally, one must consider human errors, including losing private keys or making incorrect trades (known as “fat finger” errors).

PENGU Tokenomics and Future Plans

PENGU has a maximum supply of 88.88 billion tokens, with 23.5% allocated for airdrops while the remainder will fund community developments, reward early contributors and the team, as well as ensure DEX liquidity. Post-launch, exchanges such as Binance, Bybit, and OKX plan to list the token.

The Pudgy Penguins NFT series, held by Igloo Inc., ranks as the second largest NFT series by market capitalization. Since the airdrop, the floor price of Pudgy has decreased by over 50% to an average of 15.63 ETH (roughly $60,000), despite an increase of over 50% within the last 30 days.

Eligible recipients, approximately 7 million, have 88 days to claim their PENGU tokens before they are burned from circulation. The Igloo team intends to expand PENGU functionality to Ethereum and its upcoming Abstract Chain Layer 2.