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Pay attention to your address bar.
They reference two icon files:
This one is for IE that only understands ICO format.
<link rel="shortcut icon" href="http://img1.wolai.com/img/favicon.ico" />
This one is for good browsers. This is an animated GIF.
<link rel="icon" href="http://img1.wolai.com/img/favicon.gif" type="image/gif" />
It looks like their favicon is an animated gif. It didn't seem to be animating in Google Chrome (4.x stream), but it works in Firefox.