Decentralized lending protocol ZeroLend has announced it will shut down operations after three years, citing sustainability challenges and mounting operational risks.
Summary
- ZeroLend is shutting down after three years, citing sustainability and liquidity challenges.
- Users are urged to withdraw funds as most markets are now set to 0% LTV.
- A smart contract upgrade is planned to help recover assets locked in illiquid chains.
In a statement shared by team member Deadshot Ryker, the project said it had made the “difficult decision” to wind down the protocol, noting that it is no longer sustainable in its current form.
The team pointed to shrinking liquidity across several supported chains, discontinued oracle services, and increasing security threats as key factors behind the move.
ZeroLend launched as a multi-chain lending protocol, aiming to offer decentralized borrowing and lending markets across emerging blockchain ecosystems. It gained early traction by supporting networks such as Manta, Zircuit, XLayer and Base.
However, over time, several of these chains saw liquidity dry up or become inactive, making it harder for the protocol to generate consistent revenue.
ZeroLend withdrawal process and user impact
The team said its immediate priority is ensuring users can safely withdraw their assets. Most markets have already been set to 0% loan-to-value (LTV), and users are strongly encouraged to remove any remaining funds from the platform.
Some assets remain tied to illiquid or inactive environments. To address this, ZeroLend plans to implement a timelock upgrade that will update smart contracts and enable redistribution of affected funds. The changes are intended to maximize recovery for users.
The team also referenced a past incident involving LBTC users on Base. With support from a LINEA airdrop allocation, affected suppliers will receive partial refunds. Users are asked to contact moderators or submit support tickets to coordinate next steps.
For traders, the closure marks the end of another DeFi lending venue, reducing available liquidity options across smaller chains. It also highlights the risks tied to thin margins, fragmented liquidity, and infrastructure dependencies in multi-chain lending markets.
ZeroLend said it will focus on an orderly and transparent wind-down process in the coming weeks.
