Polyhedra Network’s ZKJ token experienced a dramatic collapse on 15 June 2025, falling from $1.92 to $0.32 in just a few hours. The team behind the project has outlined a number of causes that they believe sparked the plunge, which saw over 80% of the token’s value wiped out almost overnight.
In a public update, the Polyhedra team pointed to several critical events that triggered the meltdown. At the heart of it all were a set of wallets that executed what they referred to as a “coordinated liquidity attack,” targeting the project’s decentralised trading pools on PancakeSwap. These actions, according to Polyhedra, triggered a wider chain reaction across decentralised and centralised exchanges alike.
Image: (Source: LinkedIn)
Aggressive Withdrawals and Token Dumps
At the centre of the situation were several wallets that pulled the plug on PancakeSwap’s ZKJ/KOGE trading pool. After pulling significant liquidity, the same wallets rapidly sold off large quantities of ZKJ. This sudden flood of tokens onto the market sent prices into freefall. One wallet removed over US$4 million in liquidity, exchanged KOGE for ZKJ, and dumped roughly 1.57 million tokens. Others followed the same playbook, offloading up to a million ZKJ each, sometimes within a matter of seconds.
With liquidity already thin on the ground, the mass exit caused market depth to dry up rapidly. The pool’s lack of balance meant that once the sell orders started rolling in, there was no buffer to absorb the hit. This tipped the scale entirely, and sell pressure spilled over into ZKJ’s USDT pool, where most of the project’s dollar-pegged liquidity was held.
The KOGE/USDT trading pair had barely any liquidity to begin with, and when the ZKJ/KOGE pool was drained, the impact shifted to ZKJ/USDT, which held between US$2 million and US$20 million before the incident. The imbalance caused the token’s price to drop like a stone.
Binance Rule Change Leaves Liquidity Exposed
The crash also followed recent changes to Binance’s Alpha Points farming rules. Previously, traders had been actively using the ZKJ/KOGE pool to farm Alpha rewards. But once Binance revised the system and reduced rewards for this type of activity in early June, participation in the pool thinned out considerably.
Because PancakeSwap V3 relies on concentrated liquidity, price movements outside of designated bands can lead to a sharp decline in usable depth. As a result, once the price dropped out of range, there wasn’t much holding it up. With less liquidity to cushion sudden moves, volatility took hold quickly, giving opportunists an open field to exploit.
This is true. On June 15th @EvgenyGaevoy broke into my house and he killed my dog. While he was punching the dog with his open fists, he paused and said “fk need to dump on someone asap, what the hell is ZKJ, oh well, FSH!”. I have this on camera if you need help with your court…
— Cobie (@cobie) June 16, 2025
Market Makers Step In, But Not Enough
Polyhedra stated that its own team had never sold ZKJ on the open market. Rather, they provided liquidity through market makers by contributing ZKJ, USDT, USDC, and BNB to ensure balanced trading between decentralised and centralised exchanges. These assets were deployed across DEX platforms in anticipation of rising trading volumes, especially in light of strong demand on Binance Alpha.
On the day of the sell-off, Polyhedra’s market-making partners deployed US$30 million in liquidity to try and stabilise the price. However, as traders continued to offload KOGE, the liquidity pools began converting available stablecoins and BNB into ZKJ. This left the pools increasingly loaded with a token that was already falling in value, stripping away much of the defence that the injected capital was meant to provide.
Image 2: Polyhedra faces liquidity attack (Source: LinkedIn)
Liquidations Add Fuel to the Fire
As prices dropped further, centralised exchanges like Bybit began auto-liquidating leveraged positions. Between midday and 2 PM UTC, more than US$94 million in long positions were liquidated. At least six of these events involved over a million dollars each, most notably around 12:57 PM UTC. These liquidations created a feedback loop—selling triggered more selling—accelerating the fall and making recovery harder by the minute.
Traders who had bet big on ZKJ rising were caught off guard, and their forced sell-offs added to the pile-on. With sell orders outpacing buy orders by a wide margin, the token’s value kept sliding until it hit bottom.
Wintermute’s Massive Deposits Raise Eyebrows
Adding further pressure to the situation was activity from Wintermute, a major trading firm. Around the time of the crash, one of Wintermute’s wallets transferred over 3.39 million ZKJ tokens to centralised exchanges. These deposits occurred between 12:45 PM and 2:14 PM UTC, right as the crash was in full swing.
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While the team hasn’t directly accused Wintermute of wrongdoing, the size and timing of the deposits drew attention. Large token movements during periods of high volatility can easily make a bad situation worse, especially if they add to available supply when demand is crumbling.