The ZKX Protocol, a decentralized exchange supported by Crypto.com, has recently ceased operations due to financial challenges. As a result, the value of the ZKX token has dropped by more than 50% in the past day.
Co-founder Eduard Jubany Tur made the announcement on July 30, expressing his disappointment that they could not find a sustainable path for the protocol despite their efforts. Currently, the ZKX token is trading at $0.01253, reflecting a significant decrease in value.
All markets on the ZKX Protocol have been removed, positions closed, and funds returned to users’ trading accounts. Users are encouraged to transfer their funds to their main self-custodial accounts on the Starknet blockchain. Withdrawals can be made through the Starkway bridge back to Layer 1, and there is a sunset period until the end of August for users to withdraw their funds and claim any pending STRK rewards. ZKX vesting and distribution will resume on September 1.
Established in 2021, ZKX aimed to develop a scalable decentralized exchange for perpetual trading and gained support from various investors, including StarkWare, Amber Group, Huobi, Crypto.com, as well as individual investors like Sandeep Nailwal and Ashwin Ramachandran.
Tur cited low user engagement and high operational costs as key factors in the decision to shut down the platform. The lack of user participation led to a decline in trading volumes, making it difficult for the protocol to cover its expenses. Despite considering cross-chain expansion, the significant costs involved in rewriting and re-auditing the codebase in Solidity were prohibitive.
Furthermore, broader issues within the DeFi sector, such as undervaluation of tokens like ZKX and a general lack of demand, exacerbated the protocol’s financial challenges. The decision to wind down the platform was also influenced by major token holders cashing out and the overall exhaustion of the DeFi model over the years.
Overall, the closure of the ZKX Protocol serves as a reminder of the volatility and challenges present in the cryptocurrency and DeFi markets. Investors and users are advised to exercise caution and conduct thorough research before engaging in such platforms to mitigate risks and potential losses.