ZKX Protocol on StarkNet closes due to economic strain, security breaches, and low user engagement, raising concerns about the stability of Ethereum’s Layer 2 ecosystem.
Points
- ZKX Protocol faces closure due to financial difficulties and security issues.
- The protocol struggled to maintain user engagement and daily revenue.
- The shutdown highlights challenges in the DeFi sector and Layer 2 solutions.
ZKX Protocol, a derivative protocol built on the Ethereum Layer 2 solution StarkNet, has decided to cease operations, citing economic challenges as the primary reason. Eduard Jubany Tur, the founder of ZKX, announced the closure, noting that despite significant efforts, the protocol could not maintain economic viability.
In a detailed statement on X, Eduard outlined the gradual cessation of operations. ZKX Protocol has delisted all markets and closed user positions, ensuring all funds are returned to users’ trading accounts.
https://twitter.com/0xEduard/status/1818206251089551810
Eduard revealed that the ZKX Protocol struggled to generate enough daily revenue to cover basic expenses like cloud server costs. This financial shortfall made sustaining employee salaries and other operational expenditures untenable.
Despite efforts to boost user engagement and trading activity, only a few users participated in mining STRK and ZKX rewards, further contributing to the protocol’s downfall.
Despite the setbacks, protocols like ZKX have contributed to Ethereum’s development and staking processes. The potential destabilization of such Layer 2 solutions could affect the overall performance and future advancements of the Ethereum main chain.
The price of the protocol’s native ZKX token fell 37.8% in the last 24 hours and is currently changing hands for $0.02, per CoinGecko data. The ZKX token is down 96.4% from its all-time high of $0.62, which it notched a day after its launch on June 20.
The shutdown of ZKX Protocol underscores the significant challenges faced by DeFi projects in maintaining user engagement and achieving economic sustainability. This incident raises broader questions about the stability and long-term viability of Ethereum’s Layer 2 ecosystem.