Decentralized lending protocol ZeroLEnd is ceasing operations after three years, citing an unsustainable economy amid inactive blockchains and increasing security threats.
The protocol, which managed crypto lending markets across several blockchains, said continued efforts could not overcome challenges, such as price data providers dropping support and shrinking liquidity on networks like Manta, Zircuit and XLAYER. These problems and the constant threats from hackers have made it untenable.
“Combined with the inherently thin margins and high risk profile of credit protocols, this resulted in extended periods where the protocol operated at a loss,” the team said in an official update.
Credit markets like ZeroLend are blockchain platforms where users deposit their cryptocurrencies to earn interest (like a savings account), while others borrow these assets by posting collateral. Think of it as peer-to-pool lending without banks.
Oracle providers provide real-time pricing data to credit markets such as ZeroLend. If support is removed, credit markets will be destroyed, making them unreliable or impossible to run.
The shutdown underlines a stark reality: volatile liquidity, persistent exploits, and waning investor interest in broader corners of the digital asset market continue to test DeFi protocols.
The ZeroLend team said its top priority is to ensure “users can safely withdraw their assets” from the protocol.
For assets locked in chains with low liquidity, such as Manta, Zircuit and XLAYER, the team will update the smart contracts on a fixed schedule to free up as much as possible. Users should withdraw quickly as most markets are set to a 0% loan-to-value ratio, meaning no borrowing is allowed.
LBTC holders on base will receive partial relief
Lombard Staked Bitcoin, or LBTC, a yearly version of bitcoin used in DeFi lending on ZeroLend’s markets on Coinbase’s Layer 2 network Base, experienced an exploit last February. The attacker used a counterfeit LBTC as collateral to drain liquidity.
Users who deposited LBTC there will receive a partial refund, funded by the team’s LINEA drop allocation. The announcement urged 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 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 withdraw any remaining assets and reach out through official support channels if you need assistance. Thank you for being part of ZeroLend,” it added.