Polyhedra Blames Liquidity Attacks for Sudden 80% Price Drop in ZKJ, Promises Buyback

TL;DR

• Polyhedra’s ZKJ token plunged 80% after a coordinated liquidity attack.
  
• Market maker Wintermute’s ZKJ deposits intensified the crash.
  
• Polyhedra injected $30M in liquidity and announced a buyback plan.
  
• Over $94M in leveraged long positions were liquidated.
  
• The team is conducting a technical audit and promises more transparency.
  

Polyhedra Scrambles to Restore Confidence After ZKJ Token Collapse

Polyhedra, a unicorn-status protocol known for its zero-knowledge infrastructure, is under fire after its native token, ZKJ, dropped from $2 to $0.32 on June 15, wiping out over $500 million in market cap within an hour.

Co-founder Tiancheng Xie posted on X (formerly Twitter) that the team is working on a token buyback plan and has already begun injecting liquidity to stabilize the market. “We will buy back more,” he said, vowing a long-term commitment to the token’s value recovery.

Liquidity Attack Sparked Cascade of Dumps

According to a detailed incident report posted by Polyhedra, the crash began with a liquidity attack on PancakeSwap’s ZKJ/KOGE pool. Attackers removed LP tokens and mass-dumped ZKJ, causing extreme slippage.

The KOGE/USDT pair, being shallow, could not handle the shock, resulting in a spillover effect to the deeper ZKJ/USDT market. One wallet alone sold 1.57 million ZKJ, pushing prices down nearly 80% in under an hour.

Crisis Impact Metrics

Wintermute Under Scrutiny for Escalating Dump

Blockchain data flagged a wallet linked to Wintermute depositing 3.39 million ZKJ tokens to CEXs just as the crash unfolded. Though Wintermute denied dumping tokens, its timing raised concerns.

Wintermute co-founder Evgeny Gaevoy clarified that the firm was “selling spot and going long via futures,” but denied any malicious intent. The selloff coincided with the liquidation of nearly $94 million in ZKJ long positions on exchanges like Bybit.

Polyhedra’s Crisis Response: $30M Liquidity and Buyback

Polyhedra injected $30 million worth of liquidity into USDT, USDC, and BNB pools across major DEXs, including PancakeSwap and Uniswap. The team confirmed that none of its core wallets sold ZKJ during or after the crash.

Tiancheng Xie promised a structured buyback strategy to support price recovery and deter further speculative attacks. A technical audit is now underway to trace the origin and method of the exploit.

“We need to understand the attack vector and ensure ZKJ can’t be exploited this way again,” said Xie in a follow-up statement.

Market Reaction: Short Bounce, Then Sell Pressure

After the announcement of a buyback, ZKJ temporarily bounced back by over 50%, reaching $0.63 before retracing. As of today, the token is trading around $0.35, showing only 1.3% recovery over 24 hours, according to CoinMarketCap.

Market analysts have noted that low liquidity, uncertain sentiment, and damage to institutional confidence will limit short-term upside until further measures are implemented.

What This Means for DeFi Protocols

The ZKJ crash underscores the vulnerability of low-liquidity token pairs and the risk posed by whale-dominated ownership structures. It also raises concerns about the behavior of centralized market makers in decentralized ecosystems.

Experts like DeFi Llama’s researcher “0xngmi” argue that DeFi protocols need better anti-manipulation controls, such as dynamic liquidity protections, improved oracle integrations, and real-time alerting systems.

“A token being sold off by insiders and whales is more dangerous than a bug exploit,” said crypto risk expert @cobie.

Final Thoughts: Can Polyhedra Rebuild Its Reputation?

Polyhedra’s immediate actions—namely the $30M liquidity injection and buyback commitment—have prevented a total collapse. But regaining the confidence of investors, DAOs, and partners will require much more than financial band-aids.

The upcoming audit results, buyback execution, and future tokenomics improvements will be key to Polyhedra’s recovery narrative. For now, the market watches cautiously, hoping this becomes a case study in resilience—not ruin.