Crypto.com-Backed ZKX Protocol to Shutdown Amid Economic Challenges – Decrypt

Decentralized finance trading platform ZKX Protocol is set to cease operations, citing insurmountable economic challenges, according to a statement from co-founder Eduard Jubany Tur on Wednesday.

Tur cited the increasing challenges of maintaining and engaging a DeFi community driven by token incentives. “In recent months, the volume of threats and abuse has surged, alongside persistent hacking and scam attempts,” he added.

“With much regret, we have to announce the discontinuation of the ZKX protocol. Despite our best efforts, we have been unable to find an economically viable path for the protocol,” Tur said.

Effective immediately, all markets on ZKX have been delisted, and positions closed with funds returned to users’ trading accounts. Users can transfer their funds from their trading accounts to their self-custodial accounts on Starknet. 

Withdrawals can be made through the Starkway Bridge, per the statement. The protocol’s sunset period will last until the end of August, with vesting and distribution continuing after September 1.

The decision follows a period of declining user engagement and trading volumes, which have significantly impacted ZKX’s revenue streams. 

“Our user engagement has been minimal, with only a few individuals mining STRK and ZKX rewards. Consequently, trading volumes have significantly decreased, and daily revenue can barely cover a fraction of our cloud server expenses,” Tur said. 

Despite efforts from market-makers, the costs have outstripped revenue, necessitating the shutdown.

ZKX’s economic woes are compounded by the poor performance of its token, exacerbated by major token holders cashing out, leading to a decline in token value. 

“The market is undervaluing the work done and infrastructure built by appchains and dApps coming from ecosystems like ours,” Tur noted.

Founded in 2021, ZKX aimed to create a scalable decentralized exchange for perpetual trading. ZKX previously received backing from StarkWare, Amber Group, Huobi, Crypto.com, and individual investors such as Sandeep Nailwal, Co-Founder of Polygon, and Ashwin Ramachandran, General Partner at DragonFly Capital.

Despite proving the viability of its model and building robust infrastructure on Starknet, the broader DeFi market’s exhaustion has hindered its success. 

“We started this journey wanting to build a new generation of perp app chains that could scale as much as a CEX but offer the benefits of a DEX,” Tur said. 

He acknowledged the support from the Starkware team and the Starknet Foundation, highlighting their contributions throughout the development process.

The ZKX community has also been both a source of support and pressure, Tur said.

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• Source: https://decrypt.co/242536/zkx-protocol-to-shutdown-amid-economic-challenges