Polyhedra Team Releases Initial Report on ZKJ Token Price Crash

The ZKJ token, native to the Polyhedra Network, suffered a dramatic price crash on June 15–16, 2025, falling over 80–91% in less than 24 hours. Prices dropped from around $2.00 to as low as $0.2530–$0.33, wiping out nearly $500 million in market value and triggering over $99 million in liquidations. The event sparked widespread fear, uncertainty, and doubt (FUD) across the crypto community.

Timeline and Market Impact

• The crash began on June 15, with ZKJ falling from $1.90–$2.00 to lows of $0.2530–$0.33 within hours.
• Market cap dropped from over $450–$600 million to just $95–$111.87 million.
• Trading volume declined sharply by 45–61%, falling to $1.23–$1.8 billion.
• By June 16, the price had recovered slightly to around $0.34–$0.3820, but bearish sentiment remained strong.
• After the report was launched, the price at the time of writing, June 17 had pumped up to $0.43.

Key Factors Behind the Crash (According to Polyhedra report)

1. Coordinated Liquidity Attack on PancakeSwap

Multiple wallets withdrew liquidity and dumped large amounts of ZKJ in a coordinated manner:

• Address 1 removed ~$4.3M in LP tokens, swapped KOGE for ZKJ, then sold ~1.57M ZKJ.
• Address 2 withdrew ~$3.45M, swapped, and dumped 1M ZKJ.
• Address 3 received 772K ZKJ and sold it in 8 minutes.
• Addresses 4 & 5 dumped ~1M ZKJ in the same minute.
• Address 6 sold ~0.8M ZKJ.

These actions drained liquidity from the ZKJ/KOGE pool, where liquidity was fragile and concentrated. KOGE’s lack of USDT liquidity shifted sell pressure onto ZKJ/USDT, worsening the price impact.

2. Binance Alpha Farming and Pool Fragility

The ZKJ/KOGE pair had been a popular choice for Binance Alpha farming. A recent reduction in reward incentives weakened the pool’s stability.

With PancakeSwap V3’s concentrated liquidity, any rapid price move caused slippage and made the pool more volatile. These conditions enabled manipulation.

3. DEX Market Maker Activity

Polyhedra’s team clarified that they did not sell ZKJ. Instead, they provided ZKJ, BNB, USDT, and USDC to DEX market makers for liquidity.

As sell pressure grew, market makers deployed over $30 million worth of liquidity. They used it to defend price levels across DEXs, particularly in ZKJ/USDT and KOGE/ZKJ pairs.

However, due to aggressive dumping, this liquidity was converted into ZKJ, further concentrating supply and intensifying the crash.

4. CEX Liquidation Cascade

The price drop triggered massive liquidations on CEXs like Bybit:

• From 12:00 to 14:00 UTC, over $94 million in long positions were liquidated.
• At least six large-scale liquidation events occurred around 12:57 UTC, each exceeding $1 million.

These auto-sell events pushed the price lower, creating a feedback loop of liquidations.

5. Wintermute’s Role During the Crash

Wintermute, a known market-making firm, deposited over 3.39 million ZKJ to exchanges during the crash:

• Between 12:45 and 14:14 UTC, they moved large amounts of ZKJ into CEX-linked addresses.
• These deposits added more sell pressure to already illiquid markets.

Official Response

Polyhedra released statements on X, reaffirming that the project’s core technology — including its zkBridge interoperability protocol — remained unaffected.

The team stated that the crash was not caused by a protocol flaw, but rather by external, malicious activity. Investigations into the coordinated behavior are ongoing.

Broader Context and Community Reaction

The crash caused widespread panic. The extreme drop in market value and liquidation volume triggered doubts about security and stability.

However, industry analysts and some community voices pointed to the rapid coordinated activity as a targeted manipulation, not a reflection of the project’s fundamentals.

Polyhedra’s upcoming developments, such as zkBridge integrations and cross-chain infrastructure, remain on track.

Outlook

Despite the crash, ZKJ has shown some price recovery and remains listed across major exchanges. The Polyhedra team is working on a full post-mortem and aims to release additional security measures and liquidity protocols to prevent future incidents.