ZKX Announces Shutdown, Cites Low User Engagement and Market Challenges

ZKX, a decentralized perpetual swap protocol built on Starknet, in a surprise announcement on Tuesday, said it is shutting down. The platform, launched in 2021, struggled to gain traction and faced significant financial hurdles.

“With much regret, we have to announce the discontinuation of the ZKX protocol,” stated Eduard, founder of ZKX. The announcement cited minimal user engagement and dwindling trading volumes as key factors in the decision. “Our cloud server expenses significantly outpaced revenue, making it impossible to cover salaries and other operational costs,” Eduard, its pseudonymous founder explained.

Market Pressures and Token Value Woes

The ZKX team attributed its struggles to a broader market slowdown in the Decentralized Finance (DeFi) space. “The DeFi paradigm seems to be experiencing exhaustion,” the statement elaborated. Additionally, the underwhelming performance of the ZKX token launch (TGE) added financial strain and contributed to the downward spiral.

“Major token holders exercised their right to cash out, further decreasing the token’s value,” the statement read. ZKX highlighted a general market undervaluing of appchain and dApp tokens, suggesting a wider issue within the DeFi ecosystem.

Rocky Road on Starknet

The ZKX team acknowledged the challenges of building on Starknet, a Layer-2 scaling solution. While praising the engineering of Starknet and the support from the Starkware team, ZKX admitted that delays in Starknet’s development hampered their progress.

Community Pressures and A Glimmer of Hope

The announcement revealed the team’s struggle to balance with the DeFi community’s demands. While appreciating community support, they expressed frustration with “increasing pressure and, at times, felt as though we were under duress from community members.” The statement also mentioned a surge in threats, abuse, and hacking attempts.

Despite the shutdown, ZKX remains confident in the value of their infrastructure. “We still think there’s great value in having built an incredible infrastructure to scale perp trading transparently and safely,” the statement noted. However, the high costs of rewriting and re-auditing the codebase for cross-chain compatibility made continued development unsustainable.

The Future Remains Uncertain

The ZKX shutdown marks a setback for the DeFi space. The platform’s closure leaves unanswered questions about the viability of appchain-based solutions and the future of perpetual swap protocols. Nevertheless, their innovative infrastructure may find new life in the future, potentially sparking new projects and applications within the DeFi landscape.

The ZKX platform will be sunset by the end of August, with user funds being returned to their self-custodial accounts on Starknet. ZKX vesting and distribution will continue after the platform sunsets on Sept. 1.

Yona has no crypto positions and does not hold any crypto assets. This article is provided for informational purposes only and should not be construed as financial advice. The Shib Daily is an official media and publication of the Shiba Inu cryptocurrency project. Readers are encouraged to conduct their own research and consult with a qualified financial adviser before making any investment decisions.

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