Decentralized lending protocol ZeroLEnd is shutting down operations after three years, citing unsustainable economics amid inactive blockchains and growing security threats.
The protocol, which operated crypto lending markets on various blockchains, said sustained efforts could not overcome challenges such as removing support from price data providers and decreasing liquidity on networks like 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 said in an official update.
Lending marketplaces such as ZeroLend are blockchain platforms where users deposit their cryptocurrencies to earn interest (like a savings account), while others borrow these assets by providing collateral. Think of it as peer-to-pool lending without a bank.
Oracle providers provide real-time pricing data to lending marketplaces such as ZeroLend. When they abandon support, it shatters credit markets, making them unreliable or even impossible to manage.
The shutdown underscores harsh realities: fleeting liquidity, persistent exploits, and waning investor interest in broader sectors of the digital asset market continue to test DeFi protocols.
The ZeroLend team said its top priority was to ensure “users can safely withdraw their assets” from the protocol.
For assets locked on low-liquidity chains such as Manta, Zircuit, and XLAYER, the team will update smart contracts on a set schedule to free up as much as possible. Users should withdraw quickly, as most markets have been set at a 0% loan-to-value ratio, meaning no borrowing is allowed.
LBTC holders on base benefit from partial relief
Lombard Staked Bitcoin, or LBTC, an annual version of bitcoin used in DeFi lending on ZeroLend’s marketplaces based on Coinbase’s layer 2 network, experienced an exploit in February last year. The attacker used fake LBTC as collateral to drain liquidity.
Users who deposited LBTC there will get partial refunds funded by the team’s LINEA deposit allocation. The announcement calls for affected users to contact moderators or file support tickets for refunds.
“We ask all affected LBTC users to contact moderators or submit a support ticket so that we can maintain direct communication and coordinate next steps. For token holders, this marks the conclusion of the ZeroLend journey,” the team said.
“Please remove any remaining assets and contact official support channels if you need assistance. Thank you for being part of ZeroLend,” it added.
