ZKJ, KOGE big dump 80% Can Binance Alpha still be played?

Just last night, the two most popular coins on Binance Alpha, ZKJ and KOGE, both experienced a flash crash, plummeting 80% in just two hours. The long wick candle drop left the market in an uproar. As the tokens with the highest volume on Binance Alpha in BSC, the losses for holders were indeed severe; during those two hours that night, ZKJ got liquidated to the tune of $94 million, while users who participated in Alpha score brushing also fell into panic, averaging a loss of over $800, which was far greater than the average amount of their manual score brushing airdrop.

In this regard, accusations against Binance Alpha have resurfaced in the market, claiming that it stimulates user trading through an arms race, but ultimately turns users into liquidity providers who exit as liquidity takers. Is Binance really at fault?

To discuss this event, we must start with the new section Alpha launched by Binance. On December 17, 2024, Binance officially launched Binance Alpha. Initially, it was just an experimental feature in the Binance Web3 wallet. From a functional perspective, users need to transfer their assets to the wallet before participating in trading, which separates it from Binance CEX, reflecting the strategic positioning. The envisioned functionality is led by the Binance team to discover promising projects recommended by the community and users, which will be included in the Alpha pool for display and on-chain trading. Finally, a user vote will determine whether the project goes live on Binance.

The presence of both community and potential in the text indicates that this sector is undoubtedly a new channel opened by Binance for relatively small market cap tokens like MEME. At that time, it is also easy to understand the innovation of this strategy. Binance was facing a wave of accusations regarding new listings, VC tokens were openly boycotted, and MEME was not as responsive as other exchanges. After several attempts, it faced insider skepticism, while the Web3 wallet, which is fundamentally about attracting traffic, couldn't compete with the old rival OKX. Whether for liquidity discovery or building a business moat, Binance Alpha is quite a good choice.

Imagining is beautiful, but ideals are abundant. After the launch of Binance Alpha, over 80 Tokens were launched within nearly 2 months. The excessively high listing rate has raised doubts about liquidity extraction, and the market has not supported trading volume as Binance expected. The situation of Tokens collapsing upon listing has not improved, and the highly anticipated Web3 wallet has also performed mediocrely. From the data, as of March 17, 2025, Binance's Web3 wallet accounted for only 8.3% of the total trading volume among all tracked Web3 wallets.

The turning point appeared quickly. In March, influenced by changes in the EU regulatory environment, OKX announced the suspension of OKX DEX. Restricted users needed to find new entry points, and for a time, major wallets were vying for traffic, with Binance being no exception. In addition to He Yi promoting under various KOLs, at the same time, the Binance wallet launched Binance Alpha 2.0, directly integrating Binance Alpha into CEX, breaking down the traffic barrier between CEX and DEX, allowing users to trade directly using funds within the exchange. With both internal and external favorable conditions, the effect was remarkable. By the end of March, the market share of the Binance Web3 wallet surged from 8.3% to 54.1%. By May, it soared to over 95%, showcasing a textbook-like overtaking.

The increase in market share is undoubtedly directly beneficial to its own ecology. So far, among the 162 coins that have been listed on Alpha, projects on BSC account for 45.7%, followed by Solana with 29.6% and Ethereum with 14.2%. In terms of trading volume, 17 of the top 20 coins in Alpha are BSC native projects. According to the @defioasis data panel, since the launch of Alpha 2.0 in mid-March, as of June 11, Binance Wallet has 39,569 addresses on the BSC network with a trading volume of more than $1 million, of which 45 addresses have a trading volume of more than $10 million, and 1 address has a trading volume of more than $100 million.

Relying solely on external old rivals to provide warmth is still insufficient to achieve explosive growth. In this context, the key role is played by the points system that Alpha will subsequently launch. Compared to 1.0, Alpha 2.0 adds the Alpha Points system. This points system calculates points based on users' asset holdings and trading activities in Binance Alpha and Binance Wallet, serving as a participation threshold for future activities such as Airdrop and TGE. The points system adopts a daily snapshot mechanism, with a cycle of 15 days, which examines the holdings and trading behaviors of the past 15 days.

Specifically, the mechanism has a high degree of transparency, forming a standardized and systematic points mechanism. The balance corresponds to fixed points, while the trading volume is quantified into standard points. The periodic nature also determines that users cannot achieve everything at once; they need to continuously invest to maintain their points level. In other words, this is more like a daily task, where tasks must be completed to accumulate points. For users, standardization means fairness; even with relatively limited funds, users can earn points in highly quantifiable tasks and thus gain further project airdrops or TGE subscription shares. However, it is worth noting that participation requires a points threshold, and claiming rewards also consumes points, with each claim typically requiring 15 points.

In terms of actual returns, Alpha users have also experienced a complete cycle of dividends from start to fade. In the beginning, only 45-75 points are needed to obtain an airdrop worth about 70-100U for a single number, if the daily points are 15 points, the 15-day points can reach 225 points, you can participate in several rounds of airdrops, counting the slippage and handling fees of on-chain transactions, if the cost control is good, the 15-day return can be about 20%-30%. Although the income is not large in the currency circle of 100 times at every turn, it is relatively stable, and has the advantage of convenient participation, in this context, in addition to the small cost of scattering outdoors, the major hair studios are also rushing up, for a while, X began to stage a national brush score, users are immersed in the wear rate, the amount of points, and the calculation of the point threshold is difficult to extricate themselves.

On the other hand, the project parties also have their own considerations. Compared to the previously high-threshold listing process on Binance, Binance Alpha undoubtedly provides a lower-cost, stronger narrative, and more upfront exposure path for listing coins. For most project parties facing liquidity exhaustion, following the trend is a natural choice. Resources are tilted towards the Binance system, with additional airdrop shares offered to Alpha users, launching higher staking returns and more competitive points competitions, enticing users to increase volume, enhance project exposure, and ultimately promote the listing on the main site. This kind of one-stop service is not uncommon among project parties, and due to the tilt of airdrop shares, actions that undermine the original community frequently occur.

It is also in this context that brushing volume and group LP have become the most mainstream scoring methods. Today's protagonists, ZKJ and KOGE, are precisely the best of them. Compared with other trading pairs, the trading pair provides a relatively more considerable annualized LP return, with a daily interest rate of 0.01%-0.035, and the currency value performance is stable, small volatility, and has the characteristics of low wear and tear on brush slippage, so it is favored by many Alpha users, and the TVL of the two trading pairs once exceeded 30 million US dollars. In terms of single-day trading volume, ZKJ and KOGE are the absolute leaders, just one day before the crash, their daily trading volume reached $703 million and $159 million, respectively, accounting for 85.10% of the total trading volume.

However, on the evening of June 15, these two major Tokens experienced an epic crash, with ZKJ dropping from 1.946 USD to 0.39 USD, and KOGE plummeting from 61 USD to 8.46 USD, both losing 80%, catching the holders off guard.

According to the analysis by on-chain analyst AI Yi, the core of this flash crash lies in the withdrawal of large amounts of liquidity and continuous selling by three major addresses. An address starting with 0x1A2 withdrew $3.76 million in KOGE and $532,000 in ZKJ bilateral liquidity twice within less than 5 minutes from 20:28 to 20:33, and then exchanged 45,470 KOGE for ZKJ, worth $3.796 million, and sold 1.573 million ZKJ in batches. The second largest address starting with 0x078 withdrew about $2.07 million in KOGE and $1.38 million in ZKJ bilateral liquidity while selling 1 million ZKJ. Finally, the address 0x6aD completed the liquidation after receiving 772,000 ZKJ from the second address.

Withdrawing liquidity and selling off, the operation has distinct characteristics of harvesting and targeted detonation. The timing of withdrawing liquidity also has a strategic aspect, starting with KOGE, which has lower liquidity and better control, gradually exchanging KOGE for ZKJ, and finally concentrating on selling ZKJ to complete the capital exit. From the event itself, Alpha users have undoubtedly become the biggest victims. According to user feedback, due to the big dump of ZKJ, users who panic sold suffered an average loss of about 800 dollars, which for most users has already exceeded the earnings from more than 10 Binance Alpha airdrops, rendering their previous efforts completely in vain.

From the core point of view, the direct trigger for the crash is still the mechanism problem. With the continuous expansion of the number of scores, the dividends have also faded, and in June, both the threshold for obtaining airdrops and the output-input ratio are rising indefinitely. From 45 points to 100, from 100 to 200 points, on June 13, the newly launched ROAM requires users to reach 247 points before they can claim tokens, which means that the daily points need to reach 17 points, which is about 45U, and the total value of the tokens airdropped by the single number is only 60U, which means that after 15 days of hard work, the final profit is only 15U, which is comparable to a "sweatshop" for users who do tasks every day. According to Dune data, after reaching a peak of $2 billion on June 8, Alpha trading volume has continued to decline, and the daily trading volume is now less than $1 billion. In response to the above situation, on June 14, Binance also announced the adjustment of the airdrop distribution mechanism, proposing that the airdrop distribution will be divided into two stages: standard collection and first-come, first-served, which also stimulated the withdrawal of large investors from the side.

From the overall event, the decline in score brushing led to a drop in volume, and the decrease in volume caused a reduction in yield and a decrease in probability, directly prompting LPs with certain backgrounds who are unwilling to bear low yields to withdraw from the pool. Subsequently, the tokens were panic-sold, leading to a crash under the brushing mechanism, and ultimately LPs successfully extracted the liquidity of ZKJ, while retail investors all became victims, especially against the backdrop of KOGE's liquidity shortage and lack of hedging tools, resulting in more severe losses.

The entire mechanism is not novel and occurs frequently in the crypto market, but this was the first malicious event that happened on Alpha. This undoubtedly exposes the inherent mechanism problems within Alpha itself. In addition to lacking necessary risk control designs and data verification, the hidden arms race within the mechanism—stimulated by external means such as volume manipulation—seems more like drinking poison to quench thirst, and has not brought actual benefits for discovering quality projects. In fact, as the initiator, Binance itself may be aware of this kind of competitive mechanism, and may even be secretly fanning the flames, after all, regardless of whether the project has dissent, Alpha has indeed brought active liquidity to Binance.

From a strategic perspective, Binance is undoubtedly the biggest winner. The launch of Binance Alpha has effectively built a small altcoin market within Binance, successfully preventing the hot spots of altcoins from falling away, consolidating the cold start of other exchanges and the pricing power of strong capital into Binance's own system, and further successfully activating on-chain transactions, once again returning the funds to Binance, completing the reinforcement of the moat of traffic and capital.

However, the victory of the exchange does not mean the victory of the industry. Project teams wrack their brains, and investors work diligently, battling daily over false data, which is not admirable. For every ZKJ, there will be another ZKJ. The seemingly peaceful and win-win risk isolation zone, without proper control and supervision, will ultimately become a hunting ground for large holders to harvest at specific points. In this regard, Binance, which is wavering between market share, trading volume, and fees, may also be time to take action.

Currently, regarding the ZKJ and KOGE events, Binance has issued an announcement stating that from June 17, 2025, 08:00 (UTC+8), the trading volume of trading pairs between Alpha tokens will no longer be counted towards the valid trading volume statistics for Alpha points.