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

Effective immediately, ZKX Protocol is shutting down its operations, with all markets delisted and positions closed. Funds are being returned to users’ trading accounts, according to a statement from co-founder Eduard Jubany Tur.

Tur announced the closure on Wednesday, citing insurmountable economic challenges despite efforts to sustain the protocol. “It is with great regret that we must discontinue the ZKX protocol. We have struggled to find a viable economic path forward,” Tur stated.

Users can now transfer their funds from their trading accounts to their self-custodial accounts on Starknet. Withdrawals should be processed through the Starkway Bridge. The protocol will continue its sunset period until the end of August, with vesting and distribution ongoing after September 1.

Tur attributed the closure to a combination of declining user engagement and trading volumes, which severely impacted ZKX’s revenue. He noted, “Our user engagement has dwindled, with minimal participation in mining STRK and ZKX rewards. Consequently, trading volumes have dropped, and our daily revenue barely covers cloud server costs.” The economic difficulties were further compounded by a poor-performing token, with major holders cashing out and reducing the token's value.

The decision to close also reflects broader challenges in maintaining and engaging a DeFi community driven by token incentives. Tur highlighted increased threats, abuse, hacking, and scam attempts as significant hurdles. “The market has undervalued the work and infrastructure built by appchains and dApps from ecosystems like ours,” Tur added.

Founded in 2021, ZKX aimed to create a scalable decentralized exchange for perpetual trading. The protocol had received backing from notable entities including StarkWare, Amber Group, Huobi, Crypto.com, as well as individual investors like Sandeep Nailwal of Polygon and Ashwin Ramachandran of DragonFly Capital.

Despite successfully proving its model and building robust infrastructure on Starknet, ZKX struggled with broader DeFi market exhaustion. “We embarked on this journey to develop a new generation of perpetual app chains that could scale like a CEX but offer the benefits of a DEX,” Tur said.

He expressed gratitude for the support from the Starkware team and the Starknet Foundation throughout the development process, as well as acknowledging the contributions and pressures from the ZKX community.

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