Decentralized lending platform Polyhedra’s native ZKJ token collapsed during the weekend, dropping 83% from around $2 to under $0.31. 

The price action followed a series of “abnormal” onchain transactions, triggering a liquidity crisis that rippled through the broader Binance Alpha ecosystem tied to ZKJ and KOGE.

KOGE is a token issued by 48 Club DAO, closely linked to ZKJ through shared liquidity pools, which has been incentivized as part of Binance’s Alpha Points program.

This story is an excerpt from the Unchained Daily newsletter.

The crisis began on Sunday when the KOGE/USDT liquidity pool was drained, leaving holders unable to exit their positions. Investors rushed to swap KOGE into ZKJ using the still-active KOGE/ZKJ pool, causing a flood of ZKJ redemptions that overwhelmed the ZKJ/USDT pool. 

That triggered a chain reaction and a liquidation cascade, with major holders withdrawing large quantities of both KOGE and ZKJ from on-chain pools.

Binance acknowledged the unfairness of large holders removing tokens and adjusted its Alpha Points rules so that the trading volume of the pairs would no longer count toward Alpha Points.