On July 30, ZKX (zkx.fi), a well-known derivatives exchange on Starknet, published an announcement on its Official Twitter.
In the announcement, the project team pointed out that the project would have to be closed due to various reasons, and reminded all users to withdraw their assets from the exchange as soon as possible.
The project team made this difficult decision mainly due to the following factors:
- User engagement is too low;
- Transaction volume drops sharply
- Income is difficult to support operations
In addition, the project party also admitted that the token issuance process of the project did not meet expectations, and the main token holders have been cashing out, which has led to the continued sluggish token prices.
According to the project owner's self-introduction, the project started in 2021 and has been going on for 3 years. During this period, the project owner has been trying to make its own characteristics and has been supported by funds and ecology. On the project's official website, we can see the names of a large number of well-known venture capitals (including HashKey, Amber, etc.) and institutions (Starkware).
Despite this, the project could not be sustained.
I have always heard of this project, but because I do not engage in derivatives trading, I have not participated in the project interaction and cannot share my experience with the project.
But judging from the public information, I guess the project has only managed to survive through thick and thin.
In my impression, this may be the first well-known DeFi project to publicly announce its closure since this round of bear market.
Unlike other half-dead projects that are waiting to die or disappear quietly, this project chose to expose itself publicly, which is just tearing off the veil covering the current predicament of the DeFi ecosystem.
Since the outbreak of DeFi in 2020, this ecosystem has been around for 4 years. But in my opinion, most of the innovative applications in the ecosystem are still in 2020 and 2021.
Most of the newly emerged DeFi applications in recent years are basically simple code copies, copied from Ethereum to other blockchains, and from the mainnet to the second-layer extensions.
Why do users need so many DeFi applications?
Why do users need so many DeFi tokens?
The closure of ZKX is regrettable but not surprising. I believe that more DeFi projects are heading towards irreversible death and being eliminated by the market. In the end, only a few giants will remain.
Fortunately, ZKX publicly reminded users and gave them time to withdraw their assets. This is very conscientious compared to some projects that suddenly ran away.
For us ordinary users, this should be a warning. From now on, we should quickly withdraw our assets placed in those unknown small applications, and try to participate only in interactions with well-known leading applications .
If we think about it further, is it just the application that has the problem? Will some second-layer extensions also have similar problems?
I wrote in yesterday’s article that compared to USDT and USDC on Ethereum, the security of assets issued on the second-layer extension is not as high. Because if there is a problem with the second-layer extension, all assets on the entire extension will be in danger.
Considering that ZKX is deployed on Starknet, and ZKX has problems, I happened to be thinking about the security issues of the second-layer extension, so I went to https://defillama.com/chains to take a look at the TVL of various second-layer extensions.
The situation at Starknet is dire.
ARB, ranked fifth, has a TVL of US$3.15 billion, second only to the four major public chains (Ethereum, Tron, Solana, and BSC), while Starknet's TVL is only US$289 million, less than one-tenth of ARB, ranking only 25th.
In addition, I also took a look at another coin that has already been issued, zkSync, which is equally terrible, with a TVL of only 96 million US dollars, which is not even as good as the Merlin Chain in the Bitcoin ecosystem.
If these two second-layer expansion ecosystems don’t work harder to develop, I’m afraid the only result that awaits them will be a slow death.
I am now moving all the key assets in the Starknet and zkSync ecosystems onto Ethereum, leaving only some second-layer native assets there to see the results.
"Disclaimer: This article does not constitute investment advice. Please learn and communicate with netizens, be rational, establish correct concepts, improve risk awareness, and abide by the relevant laws and regulations of the country and region where you are located."
