Starknet based ZKX Token crashes 40 Percent in 24 hours after ZKX Protocol shuts down
Users of ZKX, a social trading platform based on Starknet, were being advised to withdraw their assets before the end of this month's transition period, as the platform officially shut down on Tuesday.
After the announcement that the Crypto.com-backed ZKX Protocol is set to shut down amid economic challenges, the ZKX token has decreased by 40% in just 24 hours. The price of the protocol’s native ZKX token fell 39.59% in the last 24 hours, and the current price of ZKX is $0.01317 per CoinMarketCap data.
ZKX founder announces discontinuation of protocol
Eduard Jubany Tur, the founder of ZKX, announced the protocol's discontinuation on Tuesday on X (formerly known as Twitter). The founder cited low user engagement and declining trading volumes as the reasons behind the decision.
All positions have been closed, all markets have been delisted, and all funds have been refunded to each user's trading account. Users of the platform can transfer the funds from their trading accounts to the main self-custodial ZKX account on Starknet, and they can withdraw through the Starkway bridge back to L1 anytime they want. After August 31st, ZKX vesting and distribution will continue on the first day of September. Users are highly encouraged to take their funds out before August's sunset and claim any outstanding STRK rewards via the website, app.zkx.fi.
The founder explained why the protocol is shutting down. Fur said that the decision to cease operations is determined by a number of important factors. Few people are mining STRK and ZKX rewards, and our user engagement has been very low. Trading volumes have consequently dropped dramatically, and daily revenue hardly makes up for our cloud server costs. This shortfall prevents salary payments and other important operating costs from being covered. Fur said even with the best efforts of the market makers, the high monthly payments and rebates have greatly exceeded our revenue, and starting in August, we will be expected to make higher payments.
With the token's current value, the protocol cannot be sustained in any way. Undoubtedly, the Token Generation Event (TGE) failed to live up to expectations, and the losses that ensued have played a part in our current predicament. The value of the token has been steadily declining as major holders have exercised their right to cash out. The work done and infrastructure created by dApps and appchains from ecosystems similar to ours are being undervalued by the market. There is a clear lack of demand for tokens, and they are being undervalued. As we have seen over the past five years, there is a broader exhaustion of the DeFi paradigm that is impacting the entire industry.
We set out to create a new generation of perp app chains in 2021 with the goal of offering the benefits of a DEX while scaling as much as a CEX. We were able to demonstrate the viability of this approach. ZKX protocol founder acknowledged Damian, Liron, Eli, James, and Uri and said that building on Starknet was a challenging but enlightening experience that took longer than anticipated due to the development of Cairo 1.0 and the implementation of the new sequencer upgrades.
The founder said "One of the best-engineered rollups is still Starknet. The Starkware team has been amazing throughout, and both they and the Starknet Foundation have provided great support from the beginning." We carefully considered the possibility of extending cross-chain, but we came to the conclusion that doing so would require rewriting, testing, and re-auditing a significant portion of the entire codebase, which would be expensive. We have decided to wind down the platform due to these difficulties and the substantial investment needed. We thank our community and devoted users for their support and for their understanding during this transition, the post added.
Pseudonymous onchain Investigator ZachXBT criticizes Eduard Jubany Tur after ZKX $7.6 million Fund raised
ZachXBT, an anonymous Twitter user and crypto trader popularly known for exposing NFT projects and influencer rug pulls, has called out Tur in a post on social media. The onchain investigator said the project was a rug after the ZKX protocol team announced $7.6 million just a few weeks ago and TGE for ZKX was only a few weeks ago.
Wtf is this rug
— ZachXBT (@zachxbt) July 31, 2024
1) Your team announced a raise of $7.6M just a few weeks ago
2). TGE for ZKX was only a few weeks ago pic.twitter.com/bvrrblaujB
Tur replied by stating that, for context, let me say that the funds were raised between 2021 and 2024 to help a group of thirty individuals who were creating a specific blockchain for scaling perps. This included several code audits with Nethermind, the cost of the TGE listing, the expenses incurred by using AWS (running L3 on the cloud is expensive), developer adoption campaigns for Cairo programming, and other things. All user funds have been returned. The main wallet is self-custodial, and more than 80% of users have already taken their funds out of the protocol. The core founders lost four years of labor and their lives, and they didn't sell a single token from their allotment.
ZachXBT replied, “With the funding announcement you made just before shutting down, you excluded everyone you tricked into purchasing your scam token at TGE. Between TGE and today, none of the things you just described happened.”
Through strategic investment rounds, ZKX raised a total of $7.6 million on June 19, with strong support from key figures in the cryptocurrency venture capital space, such as StarkWare, Flowdesk, Crypto.com, Hashkey, and Amber Group.
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