Polyhedra Blames Liquidity Attack for ZKJ’s 80% Crash, Pledges Buyback and Rebuilding Efforts
Polyhedra, a crypto protocol that achieved unicorn status last year, has announced a token buyback and additional measures to restore community trust after its token, ZKJ, suffered a dramatic 80% drop in value within minutes.
“We need to understand the current situation and prevent future financial attacks,” wrote founder Tiancheng Xie in a post on X earlier Tuesday. “We will buy back more,” he added, reaffirming the team’s commitment to recovery.
The crash occurred on June 15, when ZKJ plunged from around $2 to $0.32 in less than an hour, erasing nearly $500 million in market capitalization.
In a preliminary post-mortem released early Tuesday in Asia, the team cited several contributing factors: a coordinated liquidity attack on the ZKJ/KOGE pool on PancakeSwap, large ZKJ deposits by market maker Wintermute into centralized exchanges (CEXs), and a cascade of forced liquidations across platforms like Bybit.
On-chain data shows multiple wallets draining millions from the ZKJ/KOGE pool. One address withdrew approximately $4.3 million in LP tokens and sold 1.57 million ZKJ, followed by others who each unloaded around 1 million ZKJ.
Due to insufficient depth in the KOGE/USDT pool, the sell pressure spread to the deeper ZKJ/USDT pool, setting off a liquidity spiral, according to the team.
Further downward pressure came from a Wintermute-linked address depositing 3.39 million ZKJ into CEXs during the crash window. Wintermute co-founder Evgeny Gaevoy later clarified that the firm was selling spot while simultaneously taking long positions via ZKJ futures.
The collapse triggered around $94 million in leveraged long liquidations between 12:00 and 14:00 UTC, including several six-figure margin calls that exacerbated the selloff.
To stabilize the situation, Polyhedra injected approximately $30 million in USDT, USDC, and BNB into decentralized exchange (DEX) liquidity pools. The team emphasized that none of its own ZKJ holdings were sold during the incident.
Polyhedra says a full technical investigation is underway, and its forthcoming buyback program aims to mitigate damage from the attack while discouraging similar exploits in the future.
ZKJ briefly rebounded over 50% after the incident report was published, but those gains were short-lived. The token is now up just 1.3% over the past 24 hours.
