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Polyhedra Network’s ZKJ and 48 Club DAO’s KOGE tokens suffered a dramatic plunge exceeding 50% on June 15, triggered by drained liquidity pools and subsequent panic selling.
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The depletion of KOGE’s USDT liquidity pool forced holders to offload KOGE into ZKJ, which then collapsed under the resulting sell pressure, amplifying the market downturn.
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Community backlash intensified amid accusations of liquidity mismanagement and looming token unlocks, raising concerns about the sustainability of both projects.
ZKJ and KOGE tokens plunged over 50% after liquidity pools drained, sparking panic selling and community outrage amid major token unlocks and mismanagement claims.
ZKJ Faces Major Liquidity Mismanagement
The sell-off initiated when the KOGE/USDT liquidity pool was entirely drained, leaving liquidity providers unable to exit their positions. This liquidity crisis forced investors to convert KOGE tokens into ZKJ, intensifying downward price pressure.
Community reports indicate the KOGE team neglected to replenish USDT in the liquidity pool, effectively causing a “rug pull” scenario from both token sides. This mismanagement eroded investor confidence and triggered a rapid market correction.
With KOGE’s USDT reserves depleted, holders rushed to liquidate KOGE into the ZKJ pool, which was still actively supported by its team. However, the sudden surge overwhelmed the ZKJ/USDT liquidity pair, causing a cascading price collapse and significant market cap losses.
Community Reaction and Market Impact
Social media platforms were inundated with criticism from 48 Club DAO members and wider crypto communities, accusing project teams of negligence and poor liquidity management. The phrase “rugged from both sides” became a trending topic, reflecting widespread frustration.
Despite attempts by 48 Club to clarify their position, emphasizing the importance of due diligence and risk awareness, trust in both ecosystems has been severely undermined. The incident exposed vulnerabilities in their liquidity strategies and governance frameworks.
ZKJ and KOGE: Tightly Linked Ecosystems
The crash underscores the interconnectedness of ZKJ and KOGE tokens, which are frequently paired in liquidity pools and leveraged in yield farming strategies. ZKJ serves as the backbone for zkBridge and zero-knowledge proof infrastructure, while KOGE functions as the governance token for 48 Club DAO, a DeFi collective on the BNB Chain.
Recent coordinated farming and arbitrage activities artificially inflated trading volumes between the two tokens, increasing their susceptibility to liquidity shocks and market manipulation. This interdependence magnified the impact of the liquidity drain, resulting in a sharp decline across both assets.
Upcoming Token Unlocks and Market Volatility
Adding to the pressure, a significant ZKJ token unlock valued at approximately $32 million (5.3% of total supply) is scheduled later this week. Analysts warn this event could introduce further dilution and selling pressure, complicating recovery prospects.
Moreover, Binance Alpha trading volumes have collapsed, leaving order books dominated by whales and trading bots. This dynamic has exacerbated price volatility and reduced liquidity depth, making both tokens vulnerable to sharp price swings.
Conclusion
The recent liquidity crisis and subsequent price collapse of ZKJ and KOGE tokens highlight critical risks inherent in tightly coupled DeFi ecosystems. Effective liquidity management and transparent governance are essential to restoring investor confidence and ensuring long-term sustainability. Market participants should remain vigilant, monitor upcoming token unlocks, and conduct thorough due diligence before engaging with these projects.
