Margaux Nijkerk
5 min read
In This Article:
Welcome to The Protocol, CoinDesk's weekly wrap-up of the most important stories in cryptocurrency tech development. I'm Margaux Nijkerk, CoinDesk’s Tech & Protocols reporter.
In this issue:
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Polyhedra Blames Liquidity Attacks for Sudden 80% Price Drop in ZKJ, Promises Buyback
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UK Startup Optalysys Debuts Server for Blockchains
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Kraken-Backed Ink Foundation to Airdrop INK Token, Starting With Aave-Powered Liquidity Protocol
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POLYHEDRA BLAMES LIQUIDITY ATTACKS FOR DROP IN TOKEN PRICE, RELEASES BUYBACK PLAN: Polyhedra, a crypto protocol, announced a buyback plan to restore trust after its token, ZKJ, plummeted over 80% in minutes. An initial post‑mortem released in Asian morning hours laid out various factors resulting in the collapse, including a supposed coordinated liquidity attack on PancakeSwap’s ZKJ/KOGE pool, substantial ZKJ deposits by market-making company Wintermute into centralized exchanges, and a cascade of liquidations on CEXs like Bybit. On-chain data reveals that several addresses had drained millions from the ZKJ/KOGE pool. One removed about $4.3 million in liquidity provider (LP) tokens and dumped 1.57 million ZKJ; others followed, unloading close to 1 million ZKJ each. When the shallow KOGE/USDT pool couldn’t absorb the sell pressure, activity spilled over into the deeper ZKJ/USDT pool, triggering a liquidity spiral, the team claimed. To stem the hemorrhage, Polyhedra’s team injected approximately $30 million in USDT, USDC, and BNB as DEX liquidity. It added that no ZKJ holdings belonging to the team were sold. Polyhedra affirms it’s conducting a full technical investigation, and its upcoming buyback initiative aims to both offset the attack’s impact and deter similar future exploits. — Shaurya Malwa Read more.
OPTALYSYS DEBUTS SERVERS FOR BLOCKCHAINS: Optalysys, a U.K.-based startup focused on secure computing, has introduced what it claims to be the world’s first server for blockchains that can process data at scale without decrypting it. The firm’s LightLocker node is a server that uses Fully Homomorphic Encryption (FHE), a mathematical technique allowing computations to be performed on encrypted data without compromising the encryption. The last year has seen a couple of firms raising money and exploring applications of FHE within the cryptocurrency space. Optalysys says its server hardware is purpose-built for blockchain encryption, and offers a cheaper alternative to costly and inefficient GPU-based systems, using 40% less energy. — Ian Allison Read more.
