ZKJ and KOGE were both "watered". How long can the bonus period of Binance Alpha last?

Author: Fairy, ChainCatcher

Edited by: TB, ChainCatcher

Last night wasn't Christmas Eve. The most popular "Tianquan Pool Brush" in Binance Alpha, ZKJ and KOGE, have had a linkage flash crash.

In two hours, ZKJ fell from $2 to $0.29, a drop of 85%. KOGE fell sharply from $57 to $24, and even hit $8 at one point. The market value was wiped out and liquidity evaporated instantly.

The joint collapse of ZKJ and KOGE is like a heavy punch hitting the weakness of the Alpha model. Is it an unexpected out of control in individual projects, or is the entire incentive mechanism approaching the critical point?

The collapse of the "pool-brushing" model

In the Binance Alpha game, users generally prefer to use "low wear" tokens to increase volume, and ZKJ and KOGE are representatives of the volume brushing tools. Both account for more than 87% of the Alpha token trading volume, especially ZKJ, which has been used by users to score points for more than a month.

However, ZKJ and KOGE have a high concentration of chips, with the holdings of KOGE's top ten addresses accounting for as high as 93%, and ZKJ is also close to 80%. Behind the volume and momentum, there are actually always hidden liquidity risks that may be detonated by the "trading controller" at any time.

Source: gmgn

16 days ago, ZKJ and KOGE jointly formed ZKJ/KOGE's liquidity pool on PancakeSwap, which accumulated over US$30 million in equivalent tokens. It was once rumored that ZKJ-KOGE had extremely low wear on brushes, which attracted a large number of brushers to enter the market, which laid the groundwork for flash crashes.

According to the analysis of the on-chain analyst Aunt Ai, the three main addresses collapsed in turn last night through the dual pressure of "large withdrawal of liquidity + continuous selling".

These three major addresses have a clear division of labor. They have successively withdrawn the bilateral liquidity of one million US dollars, and then "relay suppression" through KOGE exchange for ZKJ and concentrated selling of ZKJ, gradually triggering a cliff-like decline in token prices. KOGE took the lead in falling sharply, further catalyzing ZKJ's decline after the collapse of KOGE's currency price, completing the harvest of the two tokens LP and coin holders.

Aunt Ai pointed out that in addition to these three main forces, there are also multiple "cooperation addresses" with hundreds of thousands of dollars in simultaneous participation.

Source: Aunt Ai

Why did large investors suddenly withdraw their liquidity?

In fact, just the day before yesterday, KOGE token project 48 Club issued a "meaningful" announcement: "$KOGE has been completely released from the first day and has not been locked. 48Club has never promised in any form that it will not sell treasury positions. Just like Binance never said that it would not sell $BNB. Please study it yourself and be at your own risk."

Once this announcement was issued, it aroused market alert, causing KOGE and ZKJ to fall slightly on the same day, and many community users regarded it as a "market-smash-up notice." Although BroLeon, the cryptocurrency brother of Tu'ao, later revealed that the project party denied that it was related to the market smash, this "risk warning" official recommendation is likely to become one of the key catalysts for large investors to withdraw liquidity. Once the liquidity participants smell signs that the project party may reduce its holdings or withdraw liquidity, they will quickly take the risk-averse action to avoid the losses caused by sudden declines.

At the same time, ZKJ is also facing a critical time point: on June 19, it will usher in a large unlock of about 15.53 million tokens, accounting for 5.04% of the current circulation and a market value of about US$30.3 million. In addition, the overall trading volume of Alpha activities has declined significantly in recent times and the money-making effect has weakened. Liquidity providers will naturally re-evaluate the cost-effectiveness of continuing to participate.

In addition, there are some other speculations in the market. KOL danny said that due to the extremely high APY in the early stage of the KOGE-ZKJ pool, it attracted a large number of users to follow the trend and add the pool, and quickly accumulated tens of millions of dollars of liquidity. After that, the big players quietly established ZKJ's short positions on the centralized exchange. When the predetermined "detonation window" arrives, KOGE is started to be replaced with ZKJ, and then quickly sell ZKJ and exchange it back to USDT, earning contract returns while achieving currency price suppression, completing the dual harvest of "spot + contract".

Picture: Binance Alpha Token Trading Volume, Dune

How long can the Alpha bonus period last?

Since the launch of the Binance Alpha points strategy, Binance Wallet's trading volume has risen rapidly, with its market share exceeding 90%, driving the overall wallet transaction volume to soaring to a hundred times in the past, and BNB Chain's on-chain trading volume has also risen.

On the surface, this is a successful case of the platform user activity and the "overall boost" of the on-chain ecosystem. But when we tear open the cloak of this data prosperity, it is not difficult to find that this is a "pseudo-active" bubble dominated by points incentives and driven by user brushes.

The sudden collapse of ZKJ and KOGE was like a needle that pierced the bubble ecology. These two projects exposed a series of structural problems such as uneven token quality on Alpha, extremely high control of some projects, and fragile liquidity. The high transaction frequency and high return expectations created by Alpha may not be based on healthy and sustainable user engagement logic.

At the same time, Alpha's points threshold has been rising, breaking the original universal fantasy of "everyone can participate". Now, the Alpha score line has risen to 247 points, which is close to the breakeven point for many retail investors. Crypto KOL Bingfrog pointed out that whether it is the point consumption mechanism, handling fee adjustment, or the integration of points into financial products, Alpha's "bonus period" has actually ended. "In fact, all this has never been a fair competition. Any incentive mechanism based on involuntary is essentially not 'encouraging participation', but 'accelerating elimination'."

After the incident, Binance Alpha introduced new regulations, announcing that trading pairs between Alpha tokens will no longer be included in the points calculation. But judging from the evolution of the rules along the way, Alpha seems to have been "patching" and starts to patch whenever the problem is exposed or the dispute breaks out.

However, rather than constantly correcting, we should ask at the beginning: What kind of incentive mechanism can truly serve the long-term interests of ordinary users? And it really benefits the industry?