Decentralized finance lender ZeroLend is ceasing operations after three years, pointing to weak profitability, declining network activity and escalating security risks.
The protocol, which operated crypto lending markets across multiple blockchains, said its business model became unsustainable as liquidity thinned and infrastructure support faded. Activity dropped sharply on networks including Manta Network, Zircuit and X Layer, while some oracle providers withdrew price feed services critical to maintaining lending markets.
“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 public update.
ZeroLend allowed users to deposit digital assets to earn yield and borrow against posted collateral — a peer-to-pool model that relies on accurate, real-time pricing data from oracle services. When oracle providers discontinue support, lending markets can become unreliable or effectively inoperable.
The shutdown underscores broader headwinds facing parts of the DeFi sector, including shrinking liquidity, repeated exploits and softer investor demand in certain segments of the digital asset ecosystem.
The team said its immediate priority is enabling users to withdraw funds safely. Most markets have been set to a 0% loan-to-value ratio, meaning no new borrowing is permitted and participants are encouraged to remove remaining deposits promptly.
For assets held on lower-liquidity chains such as Manta, Zircuit and X Layer, the protocol plans to roll out scheduled smart contract updates aimed at unlocking as much capital as possible.
Compensation plan for LBTC users on Base
Users who deposited Lombard Staked Bitcoin (LBTC) into ZeroLend markets on Base — the layer-2 network developed by Coinbase — will receive partial refunds following a prior exploit.
In February last year, an attacker allegedly used forged LBTC as collateral to drain liquidity from the platform. The team said compensation for affected depositors will be funded through its LINEA token allocation.
ZeroLend urged impacted users to contact moderators or submit support tickets to coordinate reimbursements and complete withdrawals.
“For token holders, this marks the conclusion of the ZeroLend journey,” the team said, advising users to withdraw any remaining assets and seek assistance through official support channels if needed.
