Polyhedra Network's ZKJ Plummets 60%
Polyhedra Network's ZKJ Token Crashes 60%
On June 15th, Polyhedra Network's ZKJ token experienced a significant price drop, plummeting nearly 60% in under an hour. This resulted in a $360 million loss in market capitalization. The governance token of the 48 Club DAO, KOGE, also suffered a 50% drop, losing over $100 million in market cap during the same period.
Liquidity Crisis and Mismanagement
The sell-off began with the depletion of the KOGE/USDT liquidity pool, preventing liquidity providers from exiting their positions. This triggered panic selling as investors rushed to convert KOGE into ZKJ. Early reports suggest the KOGE team failed to replenish the USDT in its liquidity pool, leading to a situation described by some as a "rug pull from both sides."
With no USDT remaining in the KOGE pool, holders frantically moved to the ZKJ/USDT pool, which, while initially defended by its team, was overwhelmed by the sudden influx. This domino effect caused ZKJ's price to collapse, severely impacting investor confidence.
Source: CoinGecko
Impact and Fallout
Members of the 48 Club DAO expressed strong criticism, accusing the team of negligence and mismanagement. Social media was rife with calls for accountability, with the term "rugged from both sides" trending within crypto communities. The incident significantly damaged trust in both the ZKJ and KOGE ecosystems, raising concerns about the sustainability of their liquidity strategies.
Adding to the pressure, a 5.3% ZKJ token unlock, worth $32 million, was scheduled for later that week. The collapse of Binance Alpha volume further exacerbated the situation, with analysts highlighting the dominance of bots and whales in the order books, increasing volatility.
Interconnected Ecosystems
The crash underscores the close relationship between ZKJ and KOGE. Frequently paired in liquidity pools and used in farming strategies, their interconnectedness amplified the impact of the liquidity shock. While ZKJ supports zkBridge and ZKP infrastructure, KOGE serves as the governance token for the 48 Club, a group focused on BNB Chain DeFi.
The coordinated farming and arbitrage activity preceding the crash inflated trading volumes, making both tokens highly vulnerable to liquidity crises.
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Disclaimer: This information is for educational purposes only and should not be considered financial advice. Always conduct thorough research and consult with a financial professional before making any investment decisions.