DeFi protocol ZeroLend shuts down after three years, citing inactive chains and hacks

Markets Share Share this article Copy link X icon X (Twitter) LinkedIn Facebook Email DeFi protocol ZeroLend shuts down after three years, citing inactive chains and hacks The protocol is shutting down after three years, citing unsustainable economics, thin margins and rising security threats. By Omkar Godbole Feb 17, 2026, 7:19 a.m. Make us preferred on Google DeFi protocol ZeroLend shuts down after three years. (planet_fox/Pixabay) What to know : ZeroLend, a decentralized lending protocol operating across multiple blockchains, is shutting down after three years, citing unsustainable economics, thin margins and rising security threats. The team says its priority is allowing users to safely withdraw assets, especially on low-liquidity chains like Manta, Zircuit and XLAYER. Users affected by last year's LBTC exploit on Base will receive partial refunds funded by ZeroLend's LINEA token allocation. Decentralized lending protocol ZeroLEnd is winding down operations after three years, citing unsustainable economics amid inactive blockchains and rising security threats. The protocol, which ran crypto lending markets across various blockchains, said sustained efforts couldn't overcome challenges such as price data providers dropping support and shrinking liquidity on networks like Manta, Zircuit, and XLAYER. These issues and constant hacker threats have made it unsustainable. STORY CONTINUES BELOW Don't miss another story. Subscribe to the Crypto Daybook Americas Newsletter today . See all newsletters Sign me up By signing up, you will receive emails about CoinDesk products and you agree to our terms & conditions and privacy policy . "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 stated in an official update . Lending markets such as ZeroLend are blockchain platforms where users deposit their cryptocurrencies to earn interest (like a savings account), while others borrow those assets by putting up collateral. Think of it as peer-to-pool lending without banks. Oracle providers provide real-time price data to lending markets such as ZeroLend. When they drop support, it breaks the lending markets, making them unreliable or impossible to run. The shutdown underscores harsh realities: fleeting liquidity, persistent exploits, and dwindling investor interest in broader corners of the digital asset market continue to test DeFi protocols. ZeroLend's team said its top priority is ensuring that "users can safely withdraw their assets" from the protocol. For assets stuck on low-liquidity chains such as Manta, Zircuit, and XLAYER, the team will update the smart contracts on a set schedule to free up as much as possible. Users need to withdraw quickly, as most markets have been set to a 0% loan-to-value ratio, which means no borrowing is allowed. LBTC holders on Base get partial relief Lombard Staked Bitcoin, or LBTC, a year-bearing version of bitcoin used in DeFi lending on ZeroLend's markets on Coinbase's Layer 2 network Base, experienced an exploit in February last year, The attacker used a forged LBTC as collateral to drain liquidity. Users who deposited LBTC there will get partial refunds funded by the team's LINEA drop allocation. The announcement called on affected users to contact moderators or file support tickets for the refund. "We kindly ask all affected LBTC users to contact the moderators or submit a support ticket so we can maintain direct communication and coordinate the 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. 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