Polyhedra Cites Liquidity Attacks, Wintermute Deposits Behind ZKJ Price Drop

The team behind Polyhedra Network reported several factors that likely contributed to an 83% price crash of its ZKJ token on Sunday.

In a Monday X post, Polyhedra attributed five significant factors causing Polyhedra Network (ZKJ) to fall to $0.32 from $1.92 within hours — a drop of more than 80%. According to the blockchain project, there were “significant token deposits stemming from a coordinated on-chain liquidity attack, substantial deposits by Wintermute into centralized exchanges, and cascading liquidations on these exchanges.”

Polyhedra said several wallets had “coordinated a liquidity attack with an egregious malicious attempt,” with withdrawals targeting a ZKJ/KOGE liquidity pool on PancakeSwap, followed by “aggressive ZKJ sell-offs.” The affected trading pairs had fragile and imbalanced liquidity, leading the sell pressure to extend into ZKJ’s primary USDT pool.

According to Polyhedra, one Wintermute address also deposited more than 3.39 million ZKJ tokens to centralized exchanges “in the hour surrounding the crash,” while the same one deposited roughly the same amount into “on-chain, CEX-labelled deposit addresses and other addresses.”

“The initial investigation highlights substantial token transfers by Wintermute coinciding with extreme market volatility and a coordinated withdrawal of liquidity from PancakeSwap’s ZKJ/KOGE pool,” said Polyhedra, adding:

“We suspect the […] addresses coordinated a liquidity attack with an egregious malicious attempt. These actions removed critical market depth, particularly in a pool with fragile, concentrated liquidity provisioning.”