Pudgy Penguin’s PENGU Token Airdrop

The launch of Pudgy Penguin’s Solana-based token, PENGU, has been a significant event in the crypto space, functioning much like other airdrops and token generation events. Two hours post-launch on Tuesday, the token reached a fully diluted market capitalization exceeding $3.5 billion and saw more than $290 million in trading volume.

For many fans and speculators of the Pudgy Penguin NFT series, the PENGU launch signifies "free money." However, not everyone benefited from the event.

Unfortunate Trading Experience

Onchain data revealed a disheartening tale of one trader who sought to take advantage of the airdrop by turning $10,000 into less than $5 almost instantaneously. At 12:54 UTC, just five minutes before the token release, this trader swapped over 45 wrapped Solana tokens for PENGU tokens. Due to a peculiar operation of the decentralized exchange aggregator Jupiter and the timing of their trade, they only obtained 78 PENGU tokens, worth less than $3 at the time.

The specifics of this mishap are unclear, but it seems that the trader located the PENGU token address before the launch. Such traders, known as snipers, often utilize automated trading bots to seize the lowest prices right after an airdrop.

Impact of Low Liquidity

The problematic trade was executed before the official PENGU release, sending it to an unofficial PENGU liquidity pool on Raydium, which inflated the price due to limited liquidity. At the time of the trade, PENGU had an artificially high market cap of $14 trillion because of a low circulating supply.

Decentralized exchanges typically use a "bonding curve" to establish prices, which means prices increase as demand grows. However, low liquidity can create volatile price movements, leading to significant slippage, where the execution price deviates from the expected price.

Although some suspicions arose surrounding the pre-launch liquidity creation, it was confirmed that PENGU tokens and their contract had been set up weeks before the official airdrop.

Community Reactions and Warnings

Traders were alerted via social media by Jupiter the night prior to the launch, cautioning users to avoid potential scams. The unfortunate trader managed several legitimate purchases post-mishap and now holds around 62,585 PENGU, valued at approximately $2,000, in addition to other memecoins.

This incident underscores the risks involved when trading emerging crypto tokens. Solana’s ecosystem allows for counterfeit tokens, and a simple search on the Solana wallet SolFlare resulted in over two dozen unverified tokens sharing the PENGU ticker. Other human errors, such as losing private keys or making “fat finger” mistakes, are also risks in the memecoin trading environment.

PENGU Tokenomics and Development Plans

PENGU has a maximum supply of 88.88 billion tokens, with 23.5% allocated for the airdrop. The remaining tokens will support community development, reward early contributors and the team, and enhance DEX liquidity. Following the on-chain launch, PENGU will be listed on exchanges such as Binance, Bybit, and OKX.

The Pudgy Penguins NFT series, owned by Igloo Inc., holds the title of the second-largest NFT series by market cap, according to The Block's data. However, the floor price for Pudgy NFTs has declined over 50% since the airdrop, averaging 15.63 ETH (around $60,000). Despite this, their price has increased over 50% in the last 30 days.

Approximately 7 million eligible recipients have 88 days to claim their PENGU tokens before they are permanently removed from circulation. Igloo also plans to introduce PENGU functionality for Ethereum and the Abstract Chain Layer 2, which is currently under development.