1st memecoin on Avalanche SnowdogDAO (SDOG) lost over 90% value in a $30 million rugpull
The first memecoin to launch on Avalanche SnowdogDAO (SDOG) lost more than 90% of its value yesterday in what many believe to be the platform’s largest rug pull.
— James (@JamesCliffyz) November 26, 2021
SnowdogDAO (SDOG) ends in a $30 million rugpull
SnowdogDAO, a decentralized reserve memecoin based on Avalanche, failed spectacularly yesterday after appearing for just 8 days. Launched as an 8-day experiment slated to end with a massive buyback, SDOG has garnered a lot of attention in the crypto community.
However, it was also because of the game theory experiment, which will create awareness for Snowbank, that caused the loss of tens of thousands of dollars.
“We believed that the combination of a decentralized reserve meme coin that would die after 8 days, with the perspective of a giant buyback would create interest and bring exposure to the Snowbank project”, the project stated.
The culmination of the test is set to be the massive acquisition, which will be financed with assets acquired by Snowdog treasury through minting sales. In 8 days, the market value of treasuries increased to $44 million, meaning holders could compete for a share of those funds in the buyback process.
In fact, only 7% of the qualified SDOG supply was sold above the market price prior to redemption. This is something that the developers don’t disclose to the community, or at least can’t make it clear. To avoid front running, Snowdog created its own AMM based on Uniswap V2, migrating all of the SDOG liquidity from Trader Joe, a popular Avalanche DEX.
Even so, the acquisition failed spectacularly within seconds of launch, with hundreds of users losing most of their money. A single address has made nearly $10 million by swapping SDOG for other cryptocurrencies, eliminating a quarter of treasury redemption power.
Right before the acquisition, the address bought about $180,000 worth of SDOG with MIM in the amount of $10,000 and then made a deposit. A day later, they deposit and are able to withdraw over $10 million worth of MIMs. Two other wallets managed to spend $7.7 and $3.3 million using the same strategy.
After suffering massive backlash from the crypto community, the development team behind Snowdog launched a consequential investigation. And while many saw this as a rug pull, the project failed to convince the public that the action was not planned in advance.
@SnowdogDAO $SDOG rugpulled. Here’s how:
1. Promised a 40M buyback happening on its own DEX Snowswap and migrated all liquidity from Joe
2. Snowswap contract requires a “challengeKey” to trade which only insiders knew it beforehand
3. Insiders backran the buyback and made 10M pic.twitter.com/tfKDqA4t4I
— TechnoArtoria (?,?) (@artoriamaster) November 25, 2021
“We understand that the buyback experience created frustration as only 7% of the supply holders would benefit from a price superior to the market price before the buyback. We deeply regret not having communicated more on this. We should have warned the community about the risks that waiting for the buyback to sell represented”, Snowdog maintains that they were responsible for the situation only through their failure to disclose the rules of the game.
Users cannot sell their SDOG. It has already lost more than 90% of its value, can still earn some tokens.
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