Polyhedra Network Attributes Massive ZKJ Token Crash to Liquidity Attack and Wintermute Activities
The development team behind the blockchain project Polyhedra Network has detailed factors contributing to an 83% price collapse of its ZKJ token. Transactions involving approximately 3.39 million ZKJ tokens by trading firm Wintermute, alongside a coordinated on-chain liquidity attack, were cited as primary causes, driving the token’s price from $1.92 to $0.32 within a short period on Sunday.
Polyhedra Network reported five significant contributing factors in a Monday X post. These included:
- A “significant token deposit stemming from a coordinated on-chain liquidity attack,”
- “Substantial deposits by Wintermute into centralized exchanges,”
- Cascading liquidations occurring on these centralized exchanges.
The attack involved specific wallets coordinating a withdrawal from the ZKJ/KOGE liquidity pool on PancakeSwap, described as an “egregious malicious attempt.” This activity created selling pressure in a fragile trading pair, which subsequently cascaded into ZKJ’s primary trading pair.
Furthermore, Polyhedra noted the timing of “Wintermute deposits exceeding 3.39 million ZKJ tokens to centralized exchanges in the hour surrounding the crash.” Polyhedra believes Wintermute, a major game theory mining venture allegedly backed by Alameda Research, deposited “roughly the same amount… into on-chain, CEX-labelled deposit addresses and other addresses.” The project suspects the involved addresses “coordinated a liquidity attack… [which] removed critical market depth.” They added: “These actions removed critical market depth, particularly in a pool with fragile, concentrated liquidity provisioning.”
The Sunday price drop led to an estimated $500 million loss in market capitalization for the token. ZKJ’s price has since dropped from nearly $2 the previous month to $0.39 at the time of publication.
Polyhedra initially blamed the price drop on “a series of abnormal on-chain transactions” involving the ZKJ/KOGE pair. The token KOGE, which is used for governance in the BNB48 Club within the Binance ecosystem, denied involvement. A Binance representative stated there was “no dumping” by the associated group.
