Author: Jin Kang , Crypto KOL
Compiled by: Felix, PANews
On July 30, the derivatives DEX ZKX announced that it would cease operations, stating that it could not find an economically feasible protocol path. However, some community users expressed doubts about the suspension. It was announced more than a month ago that it had raised US$7.6 million in financing, and it seemed unreasonable for TGE to be suspended in just a few weeks.
Founder Eduard responded to this on the Sub-code audits, TGE listing costs, etc. All user funds have been returned and over 80% of users have exited the protocol. The core founders did not sell any of their allocated tokens.
However, this response did not "stop the public." Cryptocurrency KOL Jin Kang broke the news on the Business and CEX are explained. Below are the content details.
If this isn't a scam, what is?
The team shut down 6 weeks after TGE due to "unable to find an economically viable protocol path"
The ownership of tokens has changed in TGE
Circulation increases at TGE (relative to whitepaper), causing price to plummet
When ZKX TGE, the price dropped over 50% in the first 24 hours.
The team’s explanation is that market makers such as Amber Group, Flowdesk, and IMC are unable to stabilize the price at $0.7 due to selling by a small number of users.
They said they are waiting for a grant from the Starknet team to solve the problem.
The team mentioned that they are working with the Berachain team on a potential migration and hinted that they could spend $1 million if necessary, but they would be happy to do a bootstrap launch regardless.
But within six weeks, they announced they were ceasing operations.
The ZKX team concealed key facts, blaming market makers for the price collapse:
Claims one of the market makers sold 3.5 million of the 4 million tokens at TGE: https://etherscan.io/address/0xcEfE7FC3Ee3d6804B9073A69B2F45C67253Cc3a5#tokentxns
Increased lending to market makers to support liquidity
The first picture below is a snapshot of the wallet before TGE. The second picture is token economics, before TGE there were over 10 million tokens in circulation (not consistent with token economics). The third picture is the marketing incentive of CEX, Gate, KuCoin, and Bitget need to confirm this.
Notably, the ZKX team blocked all ZKX transfers from Starknet to mainnet for the first 9 hours after the TGE.
All trades during this time period are from the team/market maker/CEX. During this time, approximately 1 million coins were sold. The team denies this.
Due to market makers’ need for liquidity, a last-minute change to the token economics at TGE raised the market maker allocation from 4% to 8.5%.
In the first 9 hours when only CEX/market makers/teams owned ZKX, nothing was known about what caused the CEX price to collapse. Investors are not informed of the entire process.
The worst part is giving them time to clarify. But a month later, they shut down the project, citing insufficient funds and saying they had been dealing with threats that came out of nowhere.
The team did not explain how the $7.6 million was spent over the past three years or why TGE failed.
If market makers Amber Group, Flowdesk, IMC require loans that are double the actual amount (excess loans), then these market makers should provide an explanation.
CEX platforms CoinEx Global, Gate, KuCoin, and Bitget should explain whether they sold off marketing incentive tokens.
If not, then the ZKX team is lying.
The ZKX team is not transparent in its communications with the team.
$7.6 million spent in less than 3 years due to high costs (Starknet is not subsidized?) and 30+ people on the payroll? Never heard of this happening.
Hopefully, other investors in ZKX will speak out, the crypto industry needs to eliminate this opacity, and the Starknet team needs to explain why they support this plan.
(The above content is excerpted and reprinted with the authorization of our partner PANews, original text link)
Statement: The article only represents the author's personal views and opinions, and does not represent the objective views and positions of the blockchain. All contents and opinions are for reference only and do not constitute investment advice. Investors should make their own decisions and transactions, and the author and Blockchain Client will not be held responsible for any direct or indirect losses caused by investors' transactions.
〈Decentralized exchange ZKX ceases operations: blaming the market maker, a well-planned "scam"? 〉This article was first published in "Block Guest".
