Parbit

SnowdogDAO (SDOG), the first memecoin to launch on Avalanche, lost over 90% of its value yesterday in what many believe was the platform’s biggest stack draw.

Despite millions of dollars in lost investment, the SnowdogDAO team maintains that the event was not a all-in, but a “game theory experiment” gone awry.

Insiders launch token designed to avoid head-on racing

SnowdogDAO, an Avalanche-based decentralized reserve memecoin, failed dramatically yesterday after going live for only 8 days. Launched as an 8-day experiment to end with a giant buyout, SDOG has garnered a lot of attention from the crypto community.

The development team said they created the “game theory experiment” to promote Snowbank.

“We believed that the combination of a decentralized reserve coin that died after 8 days, with the prospect of a giant buyout would create interest and bring exposure to the Snowbank project.”

The highlight of the experiment was to be the giant buyout, which would be funded by assets acquired by Snowdog’s Treasure through mint sales. In 8 days, the market value of the cash rose to $ 44 million, meaning that holders were able to compete for a portion of those funds upon redemption.

What the developers didn’t disclose to the community, or at least weren’t clear enough, was that only 7% of the SDOG offering was eligible to be sold above market price. before the redemption.

To avoid rushing forward, Snowdog created its own Uniswap V2-based AMM, migrating all of the SDOG liquidity from Trader Joe’s, a popular Avalanche DEX.

However, the redemption failed dramatically within seconds of launch with hundreds of users losing the majority of their funds. A single address managed to make nearly $ 10 million by trading SDOG for other cryptocurrencies, removing a quarter of the Treasury’s buyout power.

Just prior to the redemption, the address purchased approximately $ 180,000 of SDOG with MIM in batches of $ 10,000 and then staked the token. A day later, they staked the funds and were able to drain over $ 10 million from MIM,

Two other portfolios managed to drain $ 7.7 and $ 3.3 million using the same strategy.

While the owners of the addresses have yet to be identified, many believe they most likely belonged to people closely related to the development team.

Snowdog’s autopsy reveals nothing

After suffering a major backlash from the crypto community, the development team behind Snowdog released a postmortem. And while the post was intended to make it clear that the event was not a raffle, it failed to convince audiences that the action was not planned in advance.

The team said they designed their AMM in such a way that it could be managed by robots by introducing a simple math challenge only available from the Snowbank front-end.

“A trivial calculation once you know the requirements, but it would require manual intervention to tailor the bots, leaving enough time for human interaction before the bots can join the party,” they explained in the post. . “It worked because the bots sent the failed transactions one after the other. “

However, users reported that there was no way to fix the problem, as launching a Snowswap contract required a “challengeKey”, which almost none of the users had.

Snowdog argues that they were only responsible for the situation because they had not disclosed the rules of the game:

“We understand that the buyout experience created frustration, as only 7% of supply holders would benefit from a price above market before the buyout. We deeply regret not having communicated more on this subject. We should have warned the community of the risks of waiting for the buyout to sell. “

Users who were unable to sell their SDOG, who have since lost more than 90% of their value, will still be able to craft some of the tokens. According to Snowdog, more utility will be provided for the token on Snowbank, which includes SDOG-MIM keystroke, SDOG-MIM liquidity, Trader Joe’s list, and DAO governance.

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