Inside Snowdog's $18M Buyback Pool Glitch — Game Theory or Insider Job on Avalanche?

For a number of participants, Snowdog turned Thanksgiving week into a loss rather than a celebration, raising the question of whether the project's mechanics amounted to a genuine "game theory experiment" or simply a new variety of rug pull.

Snowdog describes itself as a "decentralized reserve meme coin," a fork created by the anonymous team behind Snowbank, and one of several OHM-style forks to launch in the same period. The plan centered on an eight-day accumulation phase during which participants could acquire SDOG tokens through minting, staking, or open-market purchases.

Following accumulation, a scheduled buyback would let SDOG holders redeem their tokens for a portion of $44 million in MIM, funded by treasury reserves built up during the accumulation period. After the buyback, the plan called for burning the proceeds, reducing staking rewards, and renouncing contract ownership — steps intended to fix the token supply and position SDOG as the "meme currency of Avalanche." This marked the first Avalanche-based incident examined in this format, raising the question of whether the top-performing wallets succeeded through chance or advance knowledge.

A Price Spike Engineered by the Buyback Mechanism

Heading into the buyback, SDOG had been trading on TraderJoe at prices near $1,350. Citing a desire to prevent bots and MEV searchers from front-running the sale, the Snowdog team opted to build a separate AMM with a dedicated SDOG-MIM pool exclusively for the buyback event.

According to the team's own account, adding a simple mathematical challenge to the AMM made it nearly impossible for bots to adapt quickly and parse how the swap functioned, restricting swaps to users accessing the official front-end.

That front-end stayed behind a password wall until the moment the buyback launched. Once liquidity was moved over from TraderJoe and deposited into the new pool, it quickly became apparent that the pool's initial ratios had produced a dramatic price spike, placing SDOG at roughly $70,000 per token.

A record of the earliest transactions in the pool is available here. The first two trades captured close to 40% of the total value extracted between them:

• Transaction one: 187.8 SDOG swapped for 10.4M MIM, implying a price near $55,000 per SDOG, sent from an address that had been funded via FTX the previous day.
• Transaction two: 215.1 SDOG swapped for 7.7M MIM, implying a price near $36,000 per SDOG, sent from another address, also funded via FTX the day before.

Together, these two trades converted roughly 403 SDOG into approximately $18 million — tokens that would have been worth closer to $500,000 at pre-buyback market prices.

The "joy" Snowdog's own post-mortem described quickly gave way to frustration for most participants, many of whom ended up selling below the pre-buyback price or watching the token's value collapse while they held. Within 36 seconds of the front-end going live, SDOG's market price had already dropped below its pre-buyback level of $1,200.

Signs Pointing to Inside Access

Snowdog's write-up defended the custom pool by highlighting how many bot-driven transactions failed at launch. Even so, scrutiny grew around the earliest and most profitable trades, with several details suggesting the possibility of insider involvement:

The two top-earning trades originated from freshly created addresses (address one, address two), both funded within hours of one another the day before the buyback — and both funded through FTX, implying they were likely tied to KYC'd accounts.

These same addresses appeared to have had advance knowledge that the buyback would move to a new decentralized exchange: neither had approved SDOG for trading on TraderJoe beforehand, yet both approved the new custom pool as soon as it appeared.

Additional suspicion centers on the contract's "challengeKey" mechanism, added specifically to deter sniping bots — a feature whose inner workings would have been known to the team, who also would have had privileged access to the contract before the front-end was made public.

Fallout for Both Snowbank and Snowdog

Snowbank and Snowdog appear to have been an attempt to bridge two contrasting trends within Avalanche's crypto scene — the speculative energy around dog-themed tokens and the more measured goal of building a protocol-owned reserve currency. That combination has not gone smoothly: the fallout from the Snowdog "experiment" has weighed on Snowbank's own token price, meaning a single mishandled buyback effectively damaged both projects under the same team.

In the aftermath, Snowbank appears to have grown noticeably more cautious about future launches, a shift from its earlier approach of leveraging the hype to tease upcoming products. Whether SDOG can still succeed as Avalanche's answer to Dogecoin, or Snowbank as its reserve-currency counterpart, remains to be seen.

The central question remains open: was this a manipulated buyback representing a more elaborate version of an ordinary rug pull, or simply the inevitable unwinding of a project that was never intended to be more than an experimental meme coin?