Following the flash crash of ZKJ tokens, which lost more than 85% of its value in just one day on June 15, 2025, Polyhedra Network has published a preliminary assessment report on the incident.
The collapse was caused by a coordinated on-chain liquidity attack, a large transfer to centralized exchange of winter mute tokens (CEX), and liquidation of leveraged locations in the process, according to the report.
Pancakeswap's planned move into the liquidity pool is said to have played a major role in the collapse of the ZKJ/Koge pair. Six different addresses have withdrawn liquidity in total millions of dollars and have run aggressive ZKJ sales, according to the report.
- 0x1A29…599: We sold 1.57 million ZKJ and pulled out LP tokens worth around $4.3 million.
- 0x0781…DE7: Koge converted to ZKJ, sold 1 million ZKJ and made a $3.45 million deal.
- 0x6ad3…ebb: He bought 772 thousand ZKJs from the address above and sold them in 8 minutes.
Other addresses sold a total of 1.8 million ZKJ in the same seconds.
This attack directed sales pressure on deeper liquid ZKJ/USDT pairs rather than low liquid liquid Koge/USDT pairs. The centralized liquidity structure of the Pancakeswap V3 also caused significant losses in depth when prices were out of range, accelerated price drops.
Before the crash, ZKJ/Koge became a popular pair of the Binance Alpha agricultural campaign. However, after Binance changed its points system in early June, the rewards for such transactions fell, and liquidity support began to weaken.
In an attempt to stop the decline, the Polyhedra network team provided about $30 million in stability in USDT, USDC, BNB and more through Pancakeswap's Dex Market Maker. However, due to the price drop, all of these tokens were automatically converted to ZKJ, which was insufficient to alleviate sales pressure.
In particular, exchanges like Bybit have settled one after another, leveraged locations opened due to lower spot prices. A long position worth a total of $94 million was forced to close between 3pm and 5pm. At least six major liquidation events, each with over $1 million, occurred at 15:57 UTC alone.
WinterMute, one of the leading market makers, made a notable move during the crash. The company's address forwarded a total of 3.39 million ZKJ to the central exchange address between 15:45 and 17:14 on June 15th. During this period, ZKJ prices fell from $1.92 to $0.29. Ethereum's WinterMute wallet balance has dropped from 3.41 million ZKJ to 22,688 ZKJ.
Polyhedra Network has announced that these events are still in the preliminary evaluation phase, and detailed analysis of all movements on the chain is underway, with the report being updated in the coming days.
*This is not investment advice.
