Decentralized lending platform ZeroLend is shutting down after three years in operation, citing weak economics, thinning liquidity and mounting security risks.
The protocol, which offered crypto lending markets across multiple blockchains, said it struggled to remain viable as network activity declined and infrastructure support eroded. Inactive chains and shrinking liquidity on networks such as Manta Network, Zircuit and X Layer compounded the challenges. At the same time, repeated hacking threats and the withdrawal of oracle support made continued operations untenable.
“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 said in a statement.
ZeroLend functioned as a decentralized lending marketplace, allowing users to deposit digital assets to earn yield while borrowers accessed liquidity by posting collateral. These systems rely heavily on oracle providers for real-time price feeds; when data providers discontinue support, lending markets can become unstable or cease functioning altogether.
The closure highlights broader pressures facing parts of the decentralized finance sector, including fleeting liquidity, ongoing exploits and waning investor appetite in certain segments of the digital asset market.
The team said its immediate focus is ensuring users can safely withdraw funds. Most lending markets have been set to a 0% loan-to-value ratio, effectively halting new borrowing and encouraging users to remove remaining assets as soon as possible.
For funds stranded on lower-liquidity chains such as Manta, Zircuit and X Layer, the protocol plans to update smart contracts on a scheduled basis to unlock as much capital as possible.
Partial refunds for LBTC users on Base
Users who deposited Lombard Staked Bitcoin (LBTC) on ZeroLend’s markets on Base — the layer-2 network developed by Coinbase — will receive partial compensation following an exploit last year.
In February, an attacker allegedly used forged LBTC as collateral to drain liquidity from the protocol. To address losses, the team said refunds for affected LBTC depositors will be funded through its LINEA token allocation.
The project urged impacted users to contact moderators or submit support tickets to coordinate reimbursements and finalize withdrawals.
“For token holders, this marks the conclusion of the ZeroLend journey,” the team said, encouraging users to withdraw any remaining assets and reach out through official channels for assistance.
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