Decentralized lending protocol ZeroLEnd is shutting down operations after three years, citing unsustainable economics amid dormant blockchains and growing security threats.
The protocol, which ran crypto lending markets on multiple blockchains, said sustained efforts could not overcome challenges such as falling support from price data providers and reduced liquidity on networks such as Manta, Zircuit and XLAYER. These problems and constant threats from hackers have made it unsustainable.
“Combined with the inherently thin margins and high risk profile of lending protocols, this resulted in prolonged periods where the protocol operated at a loss,” the team stated in an official update.
Lending marketplaces like ZeroLend are blockchain platforms where users deposit their cryptocurrencies to earn interest (like a savings account), while others borrow those assets by offering collateral. Think of it as peer-to-peer lending without banks.
Oracle providers provide real-time pricing data to credit marketplaces like ZeroLend. When they lose support, credit markets break down, making them unreliable or impossible to manage.
The shutdown underscores harsh realities: Fleeting liquidity, persistent exploits, and dwindling investor interest in broader corners of the digital asset market continue to test DeFi protocols.
The ZeroLend team said their top priority is ensuring that “users can safely withdraw their assets” from the protocol.
For assets trapped on low-liquidity chains like Manta, Zircuit, and XLAYER, the team will update smart contracts on a set schedule to release as much as possible. Users should withdraw quickly as most markets have settled on a 0% loan-to-value ratio, meaning borrowing is not allowed.
LBTC holders in Base get partial relief
Lombard Staked Bitcoin, or LBTC, an annual version of bitcoin used in DeFi lending on ZeroLend markets on Coinbase’s Base Layer 2 network, experienced an exploit in February of last year. The attacker used a counterfeit LBTC as collateral to drain liquidity.
Users who deposited LBTC there will receive partial refunds funded by the team’s LINEA delivery allocation. The announcement asked affected users to contact moderators or submit support tickets for a refund.
“We kindly ask all affected LBTC users to contact the moderators or submit a support ticket so we can maintain direct communication and coordinate next steps. For token holders, this marks the conclusion of the ZeroLend journey,” the team said.
“Remove any remaining assets and reach out through official support channels if you need help. Thank you for being a part of ZeroLend,” he added.
