Decentralized lending protocol ZeroLEnd is winding down operations after three years, citing unsustainable finances amid inactive blockchains and rising security threats.
The protocol, which ran crypto-lending markets across different blockchains, said sustained efforts could not overcome challenges such as price data providers dropping support and shrinking liquidity on networks such as Manta, Zircuit and XLAYER. These problems and constant hacker threats have made it unsustainable.
“Combined with the inherently thin margins and high risk profiles of lending protocols, this resulted in long periods of the protocol operating 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 lend these assets by providing collateral. Think of it as peer-to-pool lending without banks.
Oracle providers provide real-time pricing data to lending marketplaces like ZeroLend. When they drop support, it breaks the lending markets, making them unreliable or impossible to run.
The shutdown underscores harsh realities: volatile liquidity, ongoing exploits and waning investor interest in broader corners of the digital asset market continue to test DeFi protocols.
ZeroLend’s team said its top priority is to ensure that “users can safely withdraw their assets” from the protocol.
For assets stuck in low liquidity chains such as Manta, Zircuit and XLAYER, the team will update the smart contracts on a set schedule to free up as much as possible. Users must withdraw quickly as most markets are set to a 0% loan-to-value ratio, meaning no borrowing is allowed.
LBTC holders on Base get partial relief
Lombard Staked Bitcoin, or LBTC, an annual version of bitcoin used in DeFi loans on ZeroLend’s markets on Coinbase’s Layer 2 network base, saw an exploit last February. The attacker used a counterfeit LBTC as collateral to drain liquidity.
Users who deposited LBTC there will get partial refunds funded by the team’s LINEA drop allocation. The notice encouraged affected users to contact moderators or submit support tickets for the 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 the next steps. For token holders, this marks the end of the ZeroLend journey,” the team said.
“Please withdraw any remaining assets and reach out to official support channels if you need assistance. Thank you for being a part of ZeroLend,” it added.
