Abstract, the Ethereum layer-2 backed by Pudgy Penguins parent company Igloo, will cease operations on Dec. 15 after Igloo spent tens of millions of dollars supporting the network. The shutdown follows Blast’s closure announcement just days earlier, making Abstract the second Ethereum-linked layer-2 to wind down within a week.

Igloo said it had spent “tens of millions of dollars” financing Abstract but decided that continuing to fund the network would put too much pressure on its core Pudgy Penguins business. The company also ruled out launching a token or conducting an initial coin offering to raise additional capital.

Users have been instructed to move their assets before Dec. 15. Abstract warned that any funds remaining on the network after the shutdown date could become inaccessible.

Launched in January 2025, Abstract was designed as an Ethereum layer-2 that processes transactions separately and then sends batches to Ethereum for verification. Its core strategy was to use the large consumer following of Pudgy Penguins to attract everyday users to blockchain-based applications.

Pudgy Penguins originally emerged as a collection of cartoon penguin NFTs, but the project has since expanded into toys, games and other merchandise. Its products are sold through retailers including Walmart and Target, helping turn the NFT project into a broader consumer brand.

Igloo CEO Luca Netz said the company had supported Abstract for approximately 18 months. The decision to shut down came after the network struggled with stalled growth, limited trading liquidity, modest institutional participation and a relatively small DeFi ecosystem.

Netz said Igloo could have attempted to recover some of its losses by launching a token or pursuing an ICO, even after spending eight figures on the project. Instead, the company chose not to pursue either option.

Igloo will now focus its resources on Pudgy Penguins, its digital collectibles and PENGU, the cryptocurrency connected to the brand. Netz said the company could no longer justify funding Abstract at the expense of the Pudgy Penguins business.

Abstract’s Network Economics Fell Short

Abstract reported more than 325 million transactions, $6 billion in decentralized-exchange trading volume and 4 million wallets. It also said applications operating on the blockchain had generated more than $40 million in revenue, with participants including Disney and Red Bull Racing.

However, application revenue and blockchain revenue are separate. A decentralized application or game can generate income from users, while the underlying blockchain typically receives only transaction fees for processing activity.

DefiLlama data showed that Abstract collected roughly $3,900 in chain fees over the most recent 24-hour period, compared with about $39,000 in revenue generated by applications operating on the network. The chain’s fees must still cover its operating expenses before they can translate into profit.

Abstract had intentionally positioned itself toward consumer-focused applications when it launched. Netz previously advised developers interested in building DeFi products to use networks such as Berachain or Arbitrum, while encouraging Abstract developers to focus on entertainment and consumer experiences.

That strategy did not produce the level of liquidity the network needed. Abstract now cites its limited market for DeFi applications as one of the factors contributing to its decision to shut down.

The move closely follows Blast’s Oct. 2 announcement that it would wind down its Ethereum layer-2 after concluding that its operating costs exceeded revenue. Blast had previously attracted more than $2 billion in deposits and received backing from investors including Paradigm.

Abstract still held around $76 million in assets under DefiLlama’s bridged-value measure on Wednesday. Users have until Dec. 15 to migrate their holdings through Abstract’s migration service or use a bridge to move assets elsewhere.