I actually found packing peanuts DID hold water between them (not IN them). Water would cling between the pot and the penuts as well as between each peanut. I actually found the penuts did not work very well for me at all and the medium just above them still stayed wet a long time. (I only realised what was happening when I had clear pots, I had tried it first in opaque pots and had not realised why I was still having problems).
I have found an upturned pot far more effective (although a small enough pot is even better).
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