In the Polyhedra team, after the dump of their token ZKJ by -88%, they issued a 'calming' message.
Stating that the reason is the anomalous transactions in the network over a very short period of time on the trading pair ZKJ/KOGE on DEX.
The message literally:
'Dear Polyhedra community - we want to emphasize that the foundations of Polyhedra remain strong, both in our technology and in the incredible support from our community. We continue to build and move forward as planned.
Today's price drop was caused by a series of anomalous transactions in the network over a very short period of time on the trading pair ZKJ/KOGE.
Our team is closely studying the situation and will share more detailed information as soon as possible.
As always, thank you for your continued support.
The explanation is calm and restrained, but in terms of the damage of the situation - it resembles a popular meme with a burning house.
Strangely (not), but the community has not been inspired by this explanation yet. Perhaps due to long liquidations of $97.85 million.
Regarding ZKJ/KOGE - this is an important liquid pair on PancakeSwap V3 (BSC). Its daily turnover previously reached hundreds of millions, sometimes even billions of dollars.
We dug deeper into the topic - the KOGE token belongs to 48 Club®, a DAO on the BNB Chain, and represents a governance token. Today, the 48 Club team published a warning: KOGE has not had a lock-up period since its launch, and there are no commitments from the team not to sell treasury tokens.
No one liked this and it caused a rapid price drop.
When the price of KOGE suddenly dropped (due to news and a sharp decline in trust), it automatically triggered a rapid decline in the price of ZKJ through this pair.
At first glance, it seems like nonsense. So why did ZKJ drop? The thing is, on DEX exchanges like PancakeSwap, liquidity is created in pools. For example, in the ZKJ/KOGE pool, both tokens - ZKJ and KOGE - are present. The price of one is calculated relative to the other.
What happened when the price of KOGE sharply dropped? Externally, KOGE is depreciating - it is simply falling in the market. Inside the pool, the balance remains the same, and formally the price of ZKJ to KOGE may rise. BUT arbitrageurs immediately notice the discrepancy between:
- the price of ZKJ, expressed in KOGE,
- the actual value of KOGE in dollars.
They started dumping ZKJ for KOGE until the price aligned.
The result - the collapse of ZKJ in dollar terms, because it is 'overvalued' in the pair with the depreciating KOGE, and the market is correcting this. The key point here is that the pair was very popular in terms of trading volume.
Technically, today #ZKJ has a strong potential low signal on the daily chart. The first of three possible ones. If signals for a reversal appear on the hourly timeframes in the next three days, it may indeed become a great medium-term buy. In the most bullish scenario for ZKJ, the low will be set by today's candle.
Now it is important to see how the #Polyhedra team will act next. And whether any of their connections to this story will surface.
Others, similar in charts but not in official reasons for the drop, suggest - it is very unlikely that this will be a V-shaped reversal of the token price. There was a fair repricing of the asset with its 'eternal' growth against all market declines, including February 2-3. Going forward - a new 'normal' with growth and decline together with the entire market.