A trader’s $10,000 attempt to capitalize on the Pudgy Penguins (PENGU) token launch turned disastrous when a liquidity glitch left their investment worth just $3.

The Trader’s Misstep

How $10,000 vanished in moments

On December 17, a would-be trader attempted to front-run the Pudgy Penguins token airdrop, placing a large PENGU order on the decentralized exchange Jupiter. However, due to a glitch, the transaction routed through a manipulated low-liquidity pool.

This resulted in the trader purchasing 78 PENGU tokens at an inflated $14 trillion market capitalization. Within minutes, their $10,000 investment was worth less than $3.

The Risk of Decentralized Exchanges

https://x.com/bx1core/status/1869012514551611662

Bonding curves and liquidity pool manipulation

DEX aggregators like Jupiter use automated bonding curves to calculate token prices based on demand. Manipulated pools can exploit these systems, leading traders to overpay significantly for tokens.

In this case, the trader failed to verify the token’s contract address and market cap, falling victim to a low-liquidity trap. Despite the loss, they later acquired 62,585 PENGU coins worth around $2,000.

Pudgy Penguins and PENGU Token Launch

A milestone in the NFT revival

The PENGU token launch marked a significant step in Pudgy Penguins’ recovery as a leading NFT project. The collection, owned by Igloo Inc., saw its NFTs trading at an average of $60,000 during the airdrop frenzy.

The PENGU token debuted with a $3 billion market cap, and Igloo Inc. has outlined plans to integrate PENGU features on Ethereum and launch a layer-2 network, Abstract Chain.

Lessons from the PENGU Mishap

Navigating risks in crypto trading

This incident highlights the risks of trading on decentralized exchanges, especially during high-demand token launches. Traders should:

• Verify contract addresses before making transactions.
• Avoid routing large investments through unverified liquidity pools.
• Exercise caution with volatile assets tied to NFT projects.

Pudgy Penguins’ Roadmap

What’s next for PENGU?

With 88.88 billion total tokens and seven million eligible addresses for the airdrop, PENGU aims to strengthen its position as a cornerstone of the NFT ecosystem. As Igloo Inc. advances its Ethereum and Abstract Chain integration, the PENGU token could play a critical role in the project’s continued growth.