SnowdogDAO (SDOG), the first memecoin to launch on Avalanche, lost over 90% of its value yesterday in what many believe was the platform's largest rug pull.<\/p>\n
Despite millions of dollars in investments lost, the SnowdogDAO team maintains that the event wasn't a rug pull, but a “game-theory experiment” gone wrong.<\/p>\n
SnowdogDAO, a decentralized reserve memecoin based on Avalanche, failed spectacularly yesterday after being live only 8 days. Launched as an 8-day experiment scheduled to end with a giant buyback, SDOG attracted a lot of attention in the crypto community.<\/p>\n
The development team said that they created the “game theory experiment” to create awareness for Snowbank.<\/p>\n
\n“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.”<\/p>\n<\/blockquote>\n
The pinnacle of the experiment was set to be the giant buyback, which would be financed by assets acquired by the Snowdog treasury through mint sales. In 8 days, the treasury market value grew to $44 million, which meant that holders were able to compete for a portion of those funds during the buyback.<\/p>\n
What the developers failed to disclose to the community, or at least failed to make it clear enough, was the fact that only 7% of the SDOG supply was eligible to be sold above market price before the buyback.<\/p>\n
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.<\/p>\n
However, the buyback failed spectacularly within seconds of launching, with hundreds of users losing the majority of their funds. A single address managed to make almost $10 million by swapping SDOG for other cryptocurrencies, removing a quarter of the treasury's buyback power.<\/p>\n
\nSo $SDOG<\/a> @SnowdogDAO<\/a> just rugged $10.392+ Million in $MIM<\/a>. https:\/\/t.co\/jhmkeYMTHx<\/a> pic.twitter.com\/I5owBGO9Jw<\/a><\/p>\n
— James (@JamesCliffyz) November 26, 2021<\/a><\/p><\/blockquote>\n