The wfirst meme coin in the Avalanche network, SnowdogDAO (SDOG), slipped by more than 90% yesterday after being live only for eight days. While many call it the platform’s largest rug pull, the SnowdogDAO team said that event wasn’t a rug pull. They named the millions of dollars lost as a “game-theory experiment gone wrong.”
SDOG attracted a lot of attention in the community and was scheduled to end with the major buyback after an 8-day long operation.
The huge buyback, which would be financed by assets of the Snowdog treasury through mint sales, was to be the experiment’s climax. The treasury market value increased to $44 million in just eight days, allowing holders to fight for a piece of those funds during the buyback.
The main reason for such a huge loss was that only 7% of the Avalanche-based meme coin supply was eligible to be sold above market price before the buyback. However, the founders neglected to reveal to the community, or at least had not made it explicit enough.
Snowdog built its own AMM based on Uniswap V2, moving all SDOG liquidity from popular Avalanche DEX Trader Joe to prevent front running.
Avalanche-based meme coin causes loss in millions
Hundreds of users lost their funds within the seconds of buyback launch when a single address managed to grab around $10 million by exchanging SDOG for other cryptos. This reduced treasury’s buyback power by 25%
The address purchased around $180,000 worth of the Avalanche-based meme coin just before the buyback event with MIM and staked the token. Within 24 hours, it was able to drain more than $10 million worth of MIM. Apart from this, two more wallets drained $7.7 million and $3.3 million using a similar method.
Many believe that the addresses which comprise the “7% mark” were associated with the owners of the development team.
The development team of the Snowdog came out with a post after the failed blowback to clarify that the event wasn’t a rug pull.
“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 development team said
However, it failed to convince the investors who lost their funds and believed that the actions were pre-planned.