Polyhedra Network Releases Report On 80% ZKJ Token Crash, Suspects Coordinated Liquidity Destabilization
In Brief
Polyhedra Network attributes the collapse of the ZKJ on June 15 to coordinated on-chain liquidity withdrawals, large-scale deposits to CEXs by Wintermute, and cascading liquidations that together destabilized market balance and amplified price declines.
Developer of zero-knowledge interoperability infrastructure, Polyhedra Network published a preliminary report detailing the over 80% drop in the ZKJ token’s value on June 15th, 2025, outlining confirmed on-chain activity and market behavior associated with the event.
The report cites immediate contributing factors such as a synchronized on-chain liquidity withdrawal, large-scale token deposits to centralized exchanges (CEXs) by Wintermute, and subsequent forced liquidations on these platforms. The investigation notes that ZKJ token transfers by Wintermute occurred alongside sharp market fluctuations and the deliberate removal of liquidity from the ZKJ/KOGE trading pool on PancakeSwap. Verified wallet activity shows multiple large-scale liquidity extractions from the PancakeSwap V3 pool, followed closely by high-volume sell-offs of the ZKJ token.
According to Polyhedra’s preliminary findings, certain addresses removed approximately $4.3 million in liquidity provider tokens, exchanged KOGE for ZKJ, and subsequently sold around 1.57 million ZKJ. Another set of transactions involved roughly $3.45 million in swaps from KOGE to ZKJ, followed by the sale of 1 million ZKJ, which coincided with a fast decline in KOGE’s price. One address received 772,000 ZKJ from a second wallet and liquidated it within eight minutes, while another disposed of approximately 1 million ZKJ in a single minute. An additional 800,000 ZKJ was also sold in a separate event.
Polyhedra suggests that these activities appear to be part of a coordinated effort to destabilize liquidity, executed in a manner that severely disrupted market balance. The targeted pool exhibited limited and concentrated liquidity, making it especially vulnerable to abrupt withdrawals. The imbalance was worsened by KOGE’s minimal exposure to USDT or other stablecoins, while the KOGE/ZKJ pool indirectly drew on USDT liquidity from the more liquid ZKJ/USDT pool.
Prior to the event, the KOGE/USDT trading pair had almost no stablecoin support, whereas the ZKJ/USDT pool maintained stable liquidity levels between $2 million and $20 million. As a result, when the KOGE/USDT pair failed to absorb sell pressure, the excess impact was redirected to the ZKJ/USDT pool, amplifying the downward momentum.
Prior to the market disruption, the ZKJ/KOGE trading pair was frequently used for Binance Alpha points farming. However, a change in Binance’s Alpha program rules in early June reduced incentives for such trades, which in turn began to erode the stability of the associated liquidity pool. The structure of PancakeSwap V3’s concentrated liquidity model meant that once prices moved beyond a certain threshold, effective trading depth quickly diminished, leading to heightened slippage and volatility. This environment enabled a cascading effect that intensified market instability. Polyhedra reports that it supplied ZKJ, BNB, USDT, and USDC to decentralized exchange (DEX) market makers with the objective of ensuring adequate liquidity for Binance Alpha activity. It emphasizes that none of the ZKJ tokens provided were sold and were instead allocated strictly for liquidity provision and price balancing between decentralized and centralized platforms—an assertion supported by verifiable on-chain data. As Binance Alpha trading volumes increased in the lead-up to the event, demand for ZKJ, USDT, and BNB rose accordingly, prompting market makers to inject additional liquidity. On June 15th, during the fast decline in the KOGE/ZKJ market, approximately $30 million in liquidity was deployed by these market makers through new pool formations across DEXs. This capital, consisting of USDT, USDC, and BNB, functioned as buyside liquidity to absorb the sell pressure on ZKJ. However, as the price of ZKJ fell sharply, all of the stablecoin and BNB liquidity in these pools was effectively converted into ZKJ due to the scale of the KOGE-driven selloff.
Derivatives Liquidation Cascade On CEXs And Wintermute’s Token Deposits Amid The Crash
During the fast downturn in the spot market, leveraged ZKJ positions on centralized exchanges (CEXs) such as Bybit began to unwind, triggering widespread liquidations. Between 12:00 and 14:00 UTC, roughly $94 million in long positions were forcibly closed, with at least six individual liquidations exceeding $1 million around 12:57 UTC. These automated sell orders, executed in a declining market, contributed to a feedback loop where falling prices accelerated further liquidations, amplifying the downward momentum. Within the same window of time, a wallet associated with Wintermute transferred over 3.39 million ZKJ tokens to CEXs. The price of ZKJ on these platforms fell sharply from approximately 1.9279 to 0.2939 during this sequence of deposits. Concurrently, the total ZKJ holdings of the address on Ethereum dropped from over 3.4 million to under 23,000 tokens within 90 minutes. At the start of these transfers, the ZKJ spot price was 1.9279, and by the final deposit, it had declined to 0.2939.
Polyhedra Network, the creator of the zero-knowledge interoperability protocol zkBridge, claims its technology offers substantial speed advantages over existing solutions in both proof generation and verification. On Sunday, the value of the ZKJ token declined sharply, falling from approximately $2 to $0.30 within a few hours.
The following day, Polyhedra Network co-founder Tiancheng Xie stated that the company would proceed with repurchasing ZKJ tokens, following what has been characterized as a deliberate market disruption that led to the loss in token value.
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About The Author
Alisa, a dedicated journalist at the MPost, specializes in cryptocurrency, zero-knowledge proofs, investments, and the expansive realm of Web3. With a keen eye for emerging trends and technologies, she delivers comprehensive coverage to inform and engage readers in the ever-evolving landscape of digital finance.
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Alisa, a dedicated journalist at the MPost, specializes in cryptocurrency, zero-knowledge proofs, investments, and the expansive realm of Web3. With a keen eye for emerging trends and technologies, she delivers comprehensive coverage to inform and engage readers in the ever-evolving landscape of digital finance.
