On June 15, the ZKJ token of Polyhedra Network experienced "abnormal on-chain transactions" in the ZKJ/KOGE trading pair, causing its price to plummet by 83% within just a few hours, resulting in nearly $500 million in market value evaporating. This incident not only shook the global crypto community but also sparked heated discussions in the Chinese crypto circle. As official institutions like Binance attributed the cause to "liquidity tightening" and "market liquidation waterfall," opinion leaders (KOLs) in the Chinese crypto space delved into on-chain data, revealing potential "premeditated harvesting" and the hidden traps of decentralized finance (DeFi) liquidity mining.
- ZKJ/KOGE Flash Crash: Official Explanation and Community Doubts
Polyhedra Network (ZKJ) saw an 83% drop on Sunday, which exchanges generally attributed to sudden liquidity tightening. Polyhedra's official post on X stated that the price drop was due to "a series of abnormal on-chain transactions occurring in the ZKJ/KOGE trading pair within a very short time." Binance's preliminary investigation also indicated that the crash was "caused by large holders withdrawing on-chain liquidity and a chain reaction of liquidations in the market."
However, this official explanation did not completely quell community skepticism. Some observers linked the price drop to recent token unlocks and accused Polyhedra of misconduct, although these claims have yet to be confirmed by mainstream crypto analysis platforms.
- KOL Ai Yi's In-Depth Analysis: A "Premeditated Harvesting Operation"?
Well-known Chinese crypto KOL Ai Yi (@ai_9684xtpa) acted quickly after the incident, analyzing on-chain data and suggesting that the flash crash of ZKJ and KOGE "might be a premeditated harvesting operation." She detailed the on-chain behaviors of three major addresses, revealing how the dual pressure of "large liquidity withdrawals + continuous selling" led to the token's collapse:
Ai Yi emphasized that these three addresses were just the main drivers, and in reality, there were many more "cooperating addresses" involved in similar dumping actions at the level of hundreds of thousands of dollars.
- 0xSun and Phyrex Ni: Risk Warnings for DeFi Liquidity Mining
Another Chinese KOL, 0xSun (@0xSunNFT), analyzed the "situation" of this incident on a deeper level. He pointed out that KOGE only had on-chain liquidity, making it difficult to offload in large quantities. Therefore, the dumpers cleverly utilized the KOGE/ZKJ pool to convert KOGE into ZKJ, then dumped ZKJ on the spot, possibly profiting from pre-established short contracts to "ride the wave."
0xSun specifically mentioned that this incident was related to the "Binance Alpha" event, which promoted "forming LP" as a "wealth management" activity. He believed that many participants might not understand the "impermanent loss" risk of non-stablecoin LPs, mistaking high-risk liquidity mining for stable wealth management.
In the crypto space, "forming LP" typically refers to providing liquidity pools for decentralized exchanges (DEXs) and is a common operation for participating in liquidity mining or DeFi projects.
Chinese crypto KOL Phyrex Ni (@Phyrex_Ni) also agreed, pointing out that if one simply engages in buying and selling operations, sets appropriate slippage, and uses USDT or BNB for Alpha, there shouldn't be major issues. However, if one participates in trading pairs of KOGE and ZKJ (due to the need to hold positions) or forms LPs, that indeed becomes a heavy loss zone.
He quoted another KOL, "Very Big Orange" (@0xVeryBigOrange), who said: "Don't form LPs; you're looking at points, while others are looking at the principal." This again emphasized that non-stablecoin LPs do not equate to wealth management and carry risks.
Conclusion:
The crash of Polyhedra ZKJ, under the in-depth analysis of Chinese crypto KOLs, presents a more complex and alarming picture. It is not merely a simple market fluctuation but could potentially be a meticulously planned "harvesting." This incident serves as a wake-up call for all cryptocurrency investors: amidst the high-yield temptations of DeFi and liquidity mining, it is crucial to fully understand the inherent risks, especially the potential dangers of impermanent loss and liquidity exhaustion. Blindly pursuing "Alpha" while ignoring risks may ultimately lead to significant losses of principal. In the crypto world, doing your own research (DYOR) remains an unbreakable truth.
Related: Polyhedra's ZKJ Token Plummets 83% Due to "Abnormal" Trading
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