The ZKX Protocol, a social derivatives protocol built on the Ethereum second-layer network Starknet, announced on Tuesday (30th) that it would cease operations. Eduard Jubany Tur, the founder of the protocol, admitted that the team was unable to "find an economically viable path" for ZKX.
Tur stated that ZKX has delisted all markets, closed all positions, and returned all funds to each user’s trading account. Users have until the end of August to transfer their funds from the exchange wallet to the protocol’s main self-custody account.
ZKX will start building in 2021 and launch the mainnet in the first quarter of this year. The goal is to build a new generation of perpetual contract application chains that can scale like centralized exchanges (CEX) while providing the advantages of decentralized exchanges (DEX).
According to Cointelegraph, ZKX raised $7.6 million in a round of strategic financing in June this year, with investors including Flowdesk, GCR and DeWhales. Previous investors in the agreement include Hashkey, Amber Group, Crypto.com and Starknet development company StarkWare.
Reason for cessation of operations
Tur explained several key factors in ZKX's decision to shut down on the social platform, including low user participation. He pointed out that only a small number of people participated in the protocol's reward mining program, so ZKX's transaction volume has "decreased significantly." The daily revenue from the agreement covers only a fraction of their cloud server costs.
ZKX launched its native token ZKX on June 19 this year. According to data from CoinGecko, the price of ZKX has fallen 53% in the past 24 hours, and was trading at $0.0142 at the time of writing. In an announcement yesterday, Tur stated that the protocol cannot be sustainably supported at the current value of the token. He went on to write:
“Admittedly, the TGE (Token Generation Event) failed to live up to expectations and the resulting losses have contributed to our current situation. The value of the token continues to decline as major token holders exercise their rights to cash out. .
Tur also blamed a “broader depletion” in the decentralized finance (DeFi) space. Additionally, the potentially high cost of cross-chain scaling was one of the reasons ZKX decided to shut down.
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