The ZKX Protocol, a decentralized exchange backed by Crypto.com, has ceased operations due to economic challenges, leading to a significant drop in its token value. The ZKX token plummeted over 50% following the shutdown announcement. Co-founder Eduard Jubany Tur cited low user engagement and high operational costs as primary reasons for the closure. The protocol will enter a sunset period until the end of August, during which users are encouraged to withdraw their funds and claim any pending rewards. The decision reflects broader issues in the DeFi sector, including undervaluation of tokens and a general decline in demand.

STRK

The ZKX Protocol, a Crypto.com-backed decentralized exchange, has shut down due to economic challenges.Following the announcement, the ZKX token plunged by over 50% in the last 24 hours.<h2>ZKX Token Plummets Over 50%</h2>On July 30, co-founder Eduard Jubany Tur announced the discontinuation of the ZKX protocol. He expressed regret, stating that despite their best efforts, they were unable to find an economically viable path for the protocol.According to data from CoinGecko, the ZKX token is currently trading at $0.01253, marking a 52.5% drop in value over the past 24 hours.Effective immediately, all markets on the ZKX Protocol have been delisted, positions closed, and funds returned to each user’s trading account. Users can transfer these funds to their main self-custodial accounts, which are wallets on the Starknet blockchain.Withdrawals can be made through the Starkway bridge back to Layer 1 at any time. The protocol will also enter a sunset period lasting until the end of August, during which Tur encouraged users to withdraw their funds and claim any pending STRK rewards. ZKX vesting and distribution will continue post-sunset, starting September 1.Founded in 2021, ZKX aimed to create a scalable decentralized exchange for perpetual trading. The project received backing from notable investors, including StarkWare, Amber Group, Huobi, Crypto.com, and individual investors such as Sandeep Nailwal, Co-Founder of Polygon, and Ashwin Ramachandran, General Partner at DragonFly Capital.<h2>Low User Engagement and High Costs</h2>Tur’s statement outlined various reasons for the decision to stop operations. The platform suffered from minimal user engagement, with only a handful of individuals mining STRK and ZKX rewards.This lack of participation led to a drastic decrease in trading volumes, making it challenging for the protocol to generate sufficient revenue to cover its operational costs. Despite the efforts of market-makers, the financial burden of maintaining the platform’s infrastructure, including cloud server expenses, salaries, and other essential costs, far exceeded its income.“We thoroughly evaluated the possibility of expanding cross-chain but we realized a significant portion of the entire codebase would have to be rewritten, tested, and re-audited in Solidity, and that would carry a significant cost. Given these challenges and the substantial investment required, we have made the difficult decision to wind down the platform.”The announcement also mentions broader issues within the DeFi sector. The market’s undervaluation of tokens like ZKX and a general lack of demand have worsened the protocol’s financial difficulties.Major token holders exercising their rights to cash out have further driven down the token’s value. The ongoing exhaustion of the DeFi model over the past five years has also contributed to the sector’s overall decline.

Crypto.com-Backed ZKX Protocol Shuts Down, Token Value Plummets