Dog Eat Dog World - The Daily Gwei #246
Rug pulls; rug pulls everywhere!
I don’t think I’m alone in saying that the last 24 hours in the crypto space have been absolutely crazy, right? And as usual, I was asleep while all the madness happened and woke up to a flurry of news that I had to quickly digest. Well, now that I’ve had a good 12 or so hours to take it all in, let’s dive into what happened.
First, some backstory. You’re all probably well aware of the “dog coins” that have been pumping lately off the back of the recent Dogecoin rise. Though what some of you may not be aware of is that a lot of these projects actually sent tokens to one of Vitalik’s public Ethereum addresses as part of some sort of marketing campaign (the ‘Shiba’ creators called it a “proof of burn” - that didn’t work out too well though, huh?). And since a lot of these tokens pumped, they actually ended up being worth tens of millions of dollars so what Vitalik decided to do was dump these tokens for ETH and then donate this ETH to various charities. If we just take the ETH that he donated and multiply it by the current price, it comes out to ~$60 million.
Now, of course, this money didn’t just appear out of thin air - someone ended up buying Vitalik’s dog tokens and most of the people who bought into the dog coin mania are probably in a deep loss at this stage (because they all crashed in price after Vitalik sold). My view is that Vitalik essentially ‘Robinhood’d’ this money from both speculators and investors though I did see some debate on Twitter about whether it was actually morally right for Vitalik to do this but I can’t help but think that this is a bizarre line of thinking. Vitalik didn’t break any rules or participate in any scams - he simply sold the tokens that were sent to him to the open market (and did the very noble thing of donating all the profits to charity). I also think this is just another example of the ‘chaotic good’ that this ecosystem can produce when it wants to (I wrote more about this in yesterday’s piece).
I believe what Vitalik did was also very educational as it showed a whole new class of “investors” just how easily these sorts of schemes can result in “rug pulls” or big token holders simply selling and crashing the price. The dog coins were always pure speculative vehicles with no fundamental value to back them up and from my experience the only way people learn these harsh lessons is if they experience them for themselves. In saying that, I still think it’s fine if people enter the crypto ecosystem through these vehicles of extreme speculation - it at least gives them some sort of exposure to “Ethereum things” like MetaMask, Etherscan, Uniswap and more.
Anyway, the knock-on effects from all of this seem to be that the dog coin mania has subsided which means gas prices are coming back down to more sane levels (<150 gwei). Additionally, newer users may think twice before “aping” into this sort of stuff because they now know how easily these things can fall apart. In any case, this was yet another crazy development that you only see in crypto - and I loved it.
Have a great day everyone,
Anthony Sassano
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All information presented above is for educational purposes only and should not be taken as investment advice.
Love this article. Dogecoin and Shiba Inu are what got me into crypto. What a roller coaster! Now I’m focused on ETH, BTC, and LUNA...hopefully better long term bets. Keep up the good work!