Previously, the most popular score-boosting options within Binance Alpha - $ZKJ and $KOGE both flashed crash.
Within the Binance Alpha platform, this token combination was once regarded as the most cost-effective scoring tool, with extremely high annualized LP returns and very low slippage experiences, quickly becoming the preferred pool for Alpha users. A large influx of capital and a surge in trading activity created an appearance of 'stable growth', laying the groundwork for subsequent systemic cascades.
To understand the starting point of all this, one must first return to the incentive mechanism of Binance Alpha itself.
Everything starts with Binance Alpha.
Binance Alpha is an incentive mechanism launched by Binance at the end of 2024, where users earn points by providing LP, participating in trading, and holding interactive positions to participate in regular airdrops and exclusive events on the platform.
Due to its clear incentive ratio and distribution rhythm, since its launch, it has gradually become a focal point for those looking to profit from the changing market environment, with wash trading and forming LPs becoming the most mainstream scoring methods, indirectly giving rise to token combinations specifically targeting Alpha optimization structures.
According to the data panel of @pandajackson42, on June 14 alone, the total trading volume of Binance Alpha reached $987 million, with ZKJ and KOGE trading volumes of $703 million and $159 million respectively, occupying the top two spots on the leaderboard.
However, since the trading volume peaked at $2.04 billion on June 8, the activity level of Alpha has continuously declined, with the trading volume on the 14th dropping more than 50% from the peak. On the same day, Binance announced it would adjust the airdrop distribution mechanism, dividing it into two phases: 'standard collection' and 'first come, first served'. This change was seen by some community members as an indirect catalyst for large holders to exit early and LP withdrawal behavior.
In the Alpha points acquisition mechanism, transaction volume and liquidity provision are overly weighted, leading to the prevalence of the 'market-making - wash trading - matched trading' trio, with the $ZKJ and $KOGE dual-coin pool serving as a typical example.
Is there a conspiracy from large holders?
Previously, the project team established a dual-coin trading pair of KOGE/ZKJ and opened permissions to external liquidity studios, massively guiding funds to participate in wash trading activities. Meanwhile, the liquidity of $KOGE in BNB and USDT pools has always been shallow, meaning that even if large funds want to exit, it is difficult to directly convert KOGE into mainstream assets.
Image source: @Emilia88_eth
During the high APY period, large holders of KOGE and ZKJ raised pool liquidity by continuously adding LP and encouraged more users to join. Their core logic is that KOGE itself lacks sufficient trading scenarios and external demand, making it impossible to offload directly. However, ZKJ has a huge open interest in the contract market, providing stronger liquidity. Based on Router's automatic path selection mechanism, constructing the KOGE/ZKJ trading pair can both improve liquidity and lay the groundwork for future offloading.
According to community user Emilia, the KOGE project team has been continuously adding unilateral liquidity, controlling the rise in coin prices. This has resulted in the actual liquidity of KOGE/USDT being much smaller than it appears. Once a large holder dumps KOGE, the remaining LPs cannot exit the KOGE/USDT pool and must inevitably be exchanged for ZKJ, further leading to a cascade effect.
Meanwhile, some large holders have established short positions for ZKJ on CEX in preparation for future hedging. As market activity slows down, APY declines, and wash trading funds decrease, large holders begin to gradually withdraw LPs and exchange their KOGE for ZKJ, subsequently concentrating on selling ZKJ to exit the market. This causes the spot price to plummet rapidly, leading to a massive liquidation of long positions in ZKJ contracts, further amplifying the downward trend.
Price fluctuations lead to more liquidity withdrawals, creating a typical negative feedback loop. Due to the insufficient depth of the KOGE/USDT pool, the exit path for subsequent users can almost only be realized through ZKJ, further crushing ZKJ's price. The KOGE project team continuously added unilateral liquidity of KOGE during this process, creating a false impression of price support, but actually compressed the real realizable space, exacerbating the capital predicament. Once the market experiences concentrated selling pressure, the remaining LPs cannot exit smoothly through the original path, and funds can only flow towards ZKJ, forming a chain reaction.
Ultimately, this structurally fragile design, combined with LP arbitrage, high-leverage contract positions, and high-yield inducements with no actual value inflow, quickly evolved into a typical liquidity crisis, leading to the collapse of both KOGE and ZKJ.
The process of 'large liquidity withdrawal + continuous selling'
According to on-chain analyst @ai_9684xtpa, the simultaneous flash crash of $ZKJ and $KOGE is caused by the dual pressure of 'large liquidity withdrawal + continuous selling' from three main addresses. The following is an analysis of on-chain traces:
Address 0x1A2...27599
Withdrawn 61130 KOGE (approximately $3.76 million) and 273017 ZKJ (approximately $532,000) in two transactions at 20:28:21 and 20:33:15.
Between 20:28:58 and 20:36:57, 45470 KOGE was exchanged for ZKJ, valued at $3.796 million, during which KOGE's on-chain trading volume showed significant growth.
Between 20:30:57 and 20:59:49, sold 1.573 million ZKJ in batches for USDT and BNB, valued at 3.052 million dollars, with an average selling price of $1.94. At this time, both KOGE and ZKJ experienced slight staircase declines, but did not crash.
Address 0x078...8bdE7
Withdrawn 33651 KOGE (approximately $2.07 million) and 709203 ZKJ (approximately $1.38 million) in bilateral liquidity at 20:30:33.
Between 20:31:10 and 20:58:18, exchanged 36814 KOGE for ZKJ, valued at $2.26 million.
Between 20:35:15 and 20:37:34, 1 million ZKJ were sold, valued at $1.948 million, with an average selling price of $1.948.
The address's 'relay-style dumping' finally pushed the KOGE price to decline rapidly, which is reflected in the several consecutive large red candlesticks seen by everyone.
Address 0x6aD...e2EBb
At 20:41:55, received 772759 ZKJ transferred from address 0x078...8bdE7 (the previous dumping address), valued at $1.5 million. Between 20:42:28 and 20:50:16, cleared 772000 ZKJ.
The third address primarily serves to coordinate, further catalyzing ZKJ's decline after KOGE's price crash, completing the harvesting of both token LPs and holders.
Is Binance Alpha's bonus fading away?
Such liquidity structures driven by short-term incentives can easily evolve into 'targeted harvesting' under extreme conditions. The project's fundamentals have not changed significantly, but due to the end of incentives, structural runs, and market exits, external forces intervene, causing prices to plummet sharply, ultimately borne by ordinary users who lack hedging mechanisms.
In particular, KOGE lacks hedging tools, and most participants either hold LPs unhedged or take market-making positions, resulting in severe losses. In contrast, some experienced users primarily operate around ZKJ and have set up short positions in derivatives to avoid some risks.
After the incident, the community reflected on Binance Alpha's incentive mechanism, with many suggestions focusing on weakening the single weight of trading volume and LP, increasing the linkage of points to interaction quality, holding duration, etc., and implementing punitive downgrading for abnormal short-term matched trading and concentrated withdrawals.
For Binance, Alpha remains an important tool for enhancing on-chain activity and guiding quality projects to participate, but its sustainability will depend on more refined risk control and incentive design.
Looking back, the collapse of $ZKJ was not a black swan event, but an inevitable result under the illusion of 'low fees'. Liquidity does not equal legitimacy, narratives can amplify risks, and coordinated exits are never accidental. In the crypto market, a structure with high returns but lacking a value closure is a script preset for a cascade, and the events of ZKJ and KOGE once again confirm this rule.
