ZKX Protocol Shuts Down 45 Days After Airdrop

The trading protocol ZKX, built on StarkNet, has announced its closure due to economic difficulties. This was revealed by the project’s founder, Eduard Jubany Tur.

Important Statement 30.07.24

With much regret, we have to announce the discontinuation of the ZKX protocol. Despite our best efforts, we have been unable to find an economically viable path for the protocol.

(1) All markets have been delisted, positions have been closed and all…

— Eduard (@0xEduard) July 30, 2024

On July 30, the platform disabled all markets and automatically closed user trades, returning assets to trading accounts.

According to the statement, ZKX clients must withdraw their funds by the end of August via the Starkway bridge.

“The decision to suspend operations is based on several key factors. User engagement was minimal, with only a few individuals mining STRK and ZKX rewards. Consequently, trading volumes significantly decreased, and daily revenue barely covered part of the cloud server expenses,” explained Tur.

He noted that the protocol cannot sustain operations at the current ZKX token price. Moreover, the TGE “did not meet the team’s expectations,” admitted the project leader.

At the time of writing, ZKX is trading at $0.013, having fallen 85% over the week. The asset has dropped 97% from its all-time high of $0.62, according to CoinGecko.

In total, ZKX raised $7.6 million through several investment rounds, with participation from Flowdesk, HashKey, Amber Group, Crypto.com, and StarkWare.

On June 19, the protocol conducted an airdrop for active and early community participants. However, as with other recent distributions, recipients quickly began selling their tokens on the market.

“As major token holders exercise their right to sell, its value continues to decline. The market undervalues the work and infrastructure created by appchains and dapps from ecosystems like ours,” Tur emphasized.

The co-founder of ZKX stated that the airdrop model for decentralized applications “is no longer effective.” According to him, the planned distribution put the protocol team under “pressure from community members.”

On-chain investigator ZachXBT suggested a possible rug pull concerning investor funds. Tur responded that the funding was received between 2021 and 2024 to “support a team of 30 people.” Other expenses included code audits, the release of the ZKX token, and cloud servers.

Wtf is this rug

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

— ZachXBT (@zachxbt) July 31, 2024

“You didn’t mention the people you lured into buying your fraudulent token at TGE, announcing funding and closing shortly after. Everything you just shared did not happen between TGE and today,” noted ZachXBT.

In June, the Yield App platform ceased operations after “realizing” losses incurred from the FTX collapse.