The cryptocurrency market was jolted by a dramatic and sudden collapse of Polyhedra Network's native token, ZKJ, which plummeted over 80% in a matter of minutes. This severe price action triggered immediate concern among investors and traders, prompting the Polyhedra team to issue a swift response. In a post-mortem analysis released during Asian trading hours, the project attributed the crash to what it described as a coordinated and malicious liquidity attack. This event serves as a stark reminder of the inherent risks within decentralized finance (DeFi), particularly concerning the vulnerabilities of liquidity pools on decentralized exchanges (DEXs).

Anatomy of a Liquidity Attack: The ZKJ Collapse

According to the Polyhedra team, the attack was multifaceted and targeted the ZKJ/KOGE liquidity pool on PancakeSwap. On-chain data analysis, highlighted by observers like lookonchain, revealed that the incident began when several addresses started draining millions of dollars from this specific pool. One wallet, in particular, executed a significant move by removing approximately $4.3 million in liquidity provider (LP) tokens. This was immediately followed by the dumping of 1.57 million ZKJ tokens onto the market. Other addresses followed suit, offloading nearly 1 million ZKJ each. The sell-off was compounded by substantial ZKJ deposits into centralized exchanges (CEXs) from the market-making firm Wintermute, which further increased the available supply for sale.

The attackers strategically exploited the shallow liquidity of the KOGE/USDT pool. Unable to absorb the immense sell pressure, the activity spilled over into the much deeper and more significant ZKJ/USDT pool. This triggered a cascading effect, creating a liquidity spiral that rapidly drove the price of ZKJ down. The series of events culminated in a wave of liquidations on derivatives platforms like Bybit, amplifying the downward momentum and leading to the staggering 80% price drop. This sophisticated attack underscores the importance for traders to assess not only a token's primary liquidity but also the liquidity of paired assets in DEX pools, as weaknesses can be exploited to create systemic shocks.

Polyhedra's Response and the Path to Recovery

In an effort to stabilize the market and restore investor confidence, the Polyhedra team took decisive action. They announced the injection of approximately $30 million in liquidity, comprised of stablecoins USDT and USDC, as well as BNB, into various DEX liquidity pools. This capital injection was aimed at absorbing the lingering sell pressure and establishing a more stable price floor for the ZKJ token. Crucially, the team asserted that no ZKJ holdings belonging to the project or its members were sold during the crash, a statement meant to quell fears of an internal rug pull. Furthermore, Polyhedra has committed to a full technical investigation to identify the attackers and has promised to implement a token buyback program. This buyback initiative is designed not only to offset the impact of the attack but also to deter similar exploits in the future by demonstrating the project's long-term commitment and financial backing. For traders, this response signals a potential bottoming process, though volatility is expected to remain high as the market digests these events.

The Bigger Picture: Stablecoin Surge and Institutional Inroads

While the Polyhedra incident highlighted protocol-specific risks, the broader market narrative has been overwhelmingly bullish, particularly for stablecoins. The U.S. Senate's near-passage of the GENIUS Act has provided significant regulatory tailwinds, boosting confidence in the stablecoin sector. This optimism is reflected in the stock market performance of related companies. Circle, the issuer of USDC, has seen its stock (CRCL) soar by approximately 500% since its public debut on June 5, becoming a favorite among foreign investors in South Korea. Similarly, Coinbase's stock (COIN) has climbed to a four-year high, buoyed by the substantial revenue it generates from its partnership with USDC. This powerful trend indicates that traditional market participants are increasingly viewing stablecoin infrastructure as a key growth area. Adding to this momentum, banking giant JPMorgan announced a pilot of its own permissioned USD deposit token, JPMD, on the Base network, marking a significant step by a major financial institution onto a public blockchain and signaling a new era of tokenized assets.