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Pudgy Penguins’ Abstract becomes second Ethereum layer 2 to shut in a week
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The company behind Pudgy Penguins, the popular digital collectibles and toy brand, will shut down its Abstract blockchain on December 15 after spending "tens of millions of dollars" to keep it running. The closure makes Abstract the second Ethereum-linked layer-2 network in less than a week to announce it is calling it quits, following Blast's October 2 shutdown notice. Igloo, the parent company, has told users to move their assets before the deadline, warning that anything left behind would become inaccessible. About $76 million remained on the network as of Wednesday.
Abstract is a layer-2 network, a separate system that processes transactions cheaply and sends batches to Ethereum for verification. It launched in January 2025 on the bet that the Pudgy Penguins audience could draw ordinary consumers into crypto applications. Pudgy Penguins began as a collection of cartoon penguin NFTs and has since expanded into toys, games and merchandise sold by retailers including Walmart and Target. It remains among the most valuable NFT collections in the market.
Despite those ambitions, Abstract reported more than 325 million transactions, $6 billion in decentralized-exchange trading and 4 million wallets over its roughly 18-month life. Businesses building on the network generated over $40 million in revenue, with brands such as Disney and Red Bull Racing participating. Yet none of that activity automatically funded the blockchain itself. Applications keep their own fees, while Abstract only collected the smaller charge for processing each transaction.
DefiLlama data showed roughly $3,900 in chain fees over the latest 24 hours, against about $39,000 in revenue earned by applications running on Abstract. Those fees must cover operating costs before they can become profit, and they did not. The team cited stalled growth, thin trading markets, limited institutional activity and a small decentralized-finance market as reasons for closing. The network also failed to attract meaningful liquidity despite a hyped start.
Igloo funded Abstract for about 18 months, CEO Luca Netz said, and ultimately decided against continuing at the expense of the core business. "Even after losing 8 figures, we could have launched a token or pursued an ICO. Ultimately we decided against this," Netz wrote on X. He added that Igloo will now direct its full attention to Pudgy Penguins and PENGU, the brand's cryptocurrency. "We could no longer justify taking from the Pudgy Penguins business," he wrote.
The decision also reflects a strategy that deliberately steered developers away from financial products. At launch, Netz urged builders to choose Berachain or Arbitrum for decentralized-finance projects. "Don't come to Abstract to build those type of products because we want to be really specialized around fun," he said at the time, as CoinDesk reported. Abstract now lists its limited market for such applications among its shortcomings.
The shutdown follows Blast's announcement on October 2 that operating costs exceeded revenue, despite once attracting more than $2 billion in deposits. Together, the two closures underline how difficult the layer-2 business remains, even for projects backed by strong brands and audiences. Abstract's fate shows that transaction volume and headline metrics do not guarantee sustainable economics. Users on the network have until December 15 to withdraw their remaining funds.
