ZKX Protocol Shuts Down Amid Economic Viability Concerns

ZKX Protocol, a social derivatives trading platform operating on the Ethereum Layer-2 network Starknet, is shut down. The founder, Eduard Jubany Tur, stated on July 31 that the platform does not have any financially feasible future.

Details of Shutdown

The announcement detailed the immediate actions taken by ZKX Protocol to ensure user funds’ safety. All markets on the platform have been delisted, positions have been closed, and users’ funds have been returned to their trading accounts.

Users are encouraged to transfer these funds from their trading accounts to their main self-custodial accounts, which are wallets on the Starknet network. These wallets enable users to withdraw their funds through the Starkway bridge back to Layer-1 at their convenience.

The sunset period for the platform will last until the end of August, after which ZKX vesting and distribution will continue from September 1st. Tur strongly advised users to withdraw their funds and claim any pending STRK rewards before the end of August.

Why Did it Happen?

Reflecting on the journey that began in 2021, Tur mentioned that the aim was to build a new generation of perpetual app chains that could scale like a centralized exchange (CEX) but offer the benefits of a decentralized exchange (DEX).

The decision to halt operations stems from several critical factors. Tur highlighted that user engagement had been minimal, with only a few individuals actively mining STRK and ZKX rewards. As a result, trading volumes have plummeted, and daily revenue has been insufficient to cover even a fraction of the platform’s cloud server expenses. This financial shortfall has made it impossible to meet salary and other essential operational costs.

Moreover, the current value of the ZKX token has been a major stumbling block. The token generation event (TGE) did not meet expectations, leading to major losses. As big token holders exercised their right to cash out, the token’s value continued to decline. The market has consistently undervalued the work and infrastructure built by appchains and decentralized applications (dApps) from ecosystems like ZKX Protocol.

However, the challenges faced by the ZKX Protocol were not limited to technical and financial hurdles. The community, while showing remarkable support, also exerted intense pressure. In recent months, the platform faced many incidents of threats and abuse, along with persistent hacking and scam attempts.

ZKX Token Plummets

The price of the protocol’s native ZKX token has fallen more than 50% in the last 24 hours, currently trading at $0.015, according to CoinMarketCap data. This represents a steep decline of 92% from its all-time high of $0.1975, which was reached a day after its launch on June 20.