Pudgy Penguins' parent company shuts down Abstract Chain after losing millions

Igloo Inc is closing its Abstract Chain blockchain

Pudgy Penguins' parent company, Igloo Inc, has announced it is shutting down Abstract Chain, an Ethereum Layer 2 blockchain it launched three years ago. The company said it lost "tens of millions of dollars" trying to keep the project running.

An Ethereum Layer 2 blockchain is a secondary network built on top of Ethereum to help transactions process faster and cheaper. Abstract Chain was positioned as a "consumer crypto" chain aimed at everyday users.

Users have until December 15 to withdraw their funds from the chain. After that date, the funds will no longer be accessible.

What the company is citing

According to Igloo Inc CEO Lucas Netz, Abstract Chain failed to gain enough popularity after three years of operation. He cited a "reduced appetite for what we had built" and "insufficient liquidity," meaning not enough money was moving through the network to sustain it.

The company admitted in a statement that its restricted DeFi ecosystem—the range of financial services available on the chain—stifled growth.

Netz said Igloo Inc had been funding Abstract with money taken from Pudgy Penguins, the NFT and cryptocurrency project that has since pivoted toward merchandise sales.

Part of a string of setbacks

The shutdown follows other failures at the company. This summer, Igloo Inc announced the closure of Pudgy Party, a 3D platforming game built on the chain. The company said the game lost millions of dollars and would have cost another $2.5 million to keep running. Player count had dropped to just over 200 active users.

During the game's launch, Netz had made bold claims that its in-game cosmetic trading system could let users earn more than a minimum wage job.

Reactions and criticism

Some users criticized the wind-down period as too short. Others pointed out that a class action waiver must be agreed to before funds can be migrated, raising concerns about the closure process.

Polygon, another major blockchain network, made a joke hours after the announcement, posting "It is with a heavy heart that we must inform you: this is not a shutdown announcement." Some X users called the joke bad taste. Polygon Foundation CEO Sandeep Nailwal later said it was an inside joke aimed at Polygon's own critics and not meant to mock Abstract's shutdown.

What remains unclear

The exact amount of money users have on Abstract Chain has not been disclosed. It is also unclear how many users will be able to meet the December 15 deadline or complete the class action waiver requirement to withdraw their funds.

Why this matters

Abstract Chain's shutdown is another example of the difficulty many blockchain projects face in sustaining user activity and liquidity over time. For Pudgy Penguins, which has already closed a major game and shifted focus to merchandise, the loss adds to a pattern of expensive failed ventures.

Next steps

Users must move their funds off Abstract Chain by December 15. Whether the company will address concerns about the short timeline or the class action waiver requirement has not been stated.

Sources

• Protos

Read also: Gnosis Bridges Speed Up Ethereum Deposits With Fast Confirmation Rule