Decentralized lending platform ZeroLend is shutting down after three years, citing unworkable economics, fading liquidity across several blockchains and mounting security pressures.

In a statement, the team said the protocol could no longer sustain operations as activity dried up on networks such as Manta Network, Zircuit and X Layer. At the same time, the withdrawal of support from key oracle providers — which supply real-time price feeds essential for lending markets — further undermined the system’s stability.

“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.

ZeroLend operated as a decentralized lending marketplace, enabling users to deposit cryptocurrencies to earn yield while allowing borrowers to access liquidity by posting collateral. The model depends heavily on reliable price data; when oracle services are discontinued, lending functions can break down, making markets unreliable or unusable.

The closure highlights persistent challenges facing segments of decentralized finance, including shrinking liquidity, recurring exploits and waning investor interest in certain corners of the digital asset market.

The team said its immediate priority is ensuring users can safely withdraw their funds. Most lending markets have been adjusted to a 0% loan-to-value ratio, effectively halting new borrowing and encouraging participants to remove remaining assets promptly.

For funds locked on lower-liquidity networks like Manta, Zircuit and X Layer, the protocol plans to implement scheduled smart contract updates aimed at unlocking as much capital as possible.

Partial refunds for LBTC depositors

Users who supplied Lombard Staked Bitcoin (LBTC) to ZeroLend’s markets on Base — the layer-2 network launched by Coinbase — will receive partial compensation tied to a prior exploit.

In February last year, an attacker allegedly used forged LBTC as collateral to drain liquidity from the platform. The team said affected depositors will be reimbursed in part using its LINEA token allocation.

ZeroLend has asked impacted users to contact moderators or submit support tickets to coordinate refunds and finalize withdrawals.

“For token holders, this marks the conclusion of the ZeroLend journey,” the team said, urging users to withdraw remaining assets and reach out through official support channels for assistance.