Decentralized lending protocol ZeroLend has announced it will wind down operations after nearly three years in the DeFi market. The team cited sustainability issues, shrinking liquidity, and ongoing security risks as key reasons behind the shutdown.
In its latest statement, ZeroLend urged users to withdraw their funds as soon as possible. The protocol has already begun an orderly closure process to protect remaining assets.
ZeroLend once operated across several blockchain networks, including:
- Linea
- zkSync
- Base
- Manta Network
- Zircuit
- XLayer
However, several of these chains have seen declining activity and thin liquidity. Founder “Ryker” explained that discontinued oracle services and narrow lending margins also made the business unsustainable.
As a precaution, the protocol has set most lending markets to 0 percent loan to value. This step disables new borrowing while allowing withdrawals. Therefore, users can retrieve deposits but cannot open fresh leveraged positions.
User Protection Measures
ZeroLend acknowledged that some assets remain stuck on low activity chains. To address this issue, the team plans smart contract upgrades and timelock adjustments to redistribute locked funds.
The protocol also referenced a previous exploit involving LBTC on Base. It pledged partial refunds for affected suppliers using a LINEA token allocation.
ZeroLend’s total value locked has dropped to near historic lows, reflecting capital outflows ahead of the shutdown. The closure highlights broader challenges in decentralized finance, including fragmented liquidity and heavy reliance on oracle providers.
For users, the message is simple. Withdraw funds promptly to reduce risk during the wind down period.
