ZeroLend Announces Gradual Shutdown, Sets 0% LTV for Most Markets and Urges Users to Withdraw Funds

On February 17, ZeroLend, a multi-chain lending protocol, announced it will gradually wind down operations. The decision follows three years of operation and comes amid declining liquidity and increasing operational risks. The team cited oracle support termination and security threats as additional factors behind the move.

The protocol has set a 0% loan-to-value (LTV) ratio for most markets. This action effectively disables new borrowing while allowing users to withdraw their funds. ZeroLend urges all users to take immediate steps to retrieve their assets.

ZeroLend's TVL has dropped to $6.6 million, near an all-time low. The team emphasizes a transparent and orderly process to ensure user funds are returned safely. Users are advised to monitor updates via official channels.

Why Did This Happen?

ZeroLend cited multiple reasons for the shutdown. Diminished liquidity from early supporter chains has made operations unsustainable. Oracle providers have also stopped supporting the protocol, complicating market operations.

The protocol has faced heightened security risks as it scaled. Increased hacker and fraud activity, combined with thin profit margins and long-term losses, prompted the decision to close operations. The team stated these conditions are no longer viable for the protocol's continued existence.

What Actions Is the Team Taking?

ZeroLend has implemented a 0% LTV for most markets. This measure disables borrowing and prioritizes withdrawals. The team is also preparing timelock and contract upgrades to assist with fund recovery on low-liquidity chains.

For affected assets like Manta, Zircuit, and XLayer, the team will use smart contract updates to reallocate funds. This approach aims to maximize user fund recovery while minimizing disruption.

What Should Users Do Next?

Users are strongly advised to withdraw funds as soon as possible. The team recommends doing so via the app to ensure a smooth process. Users with assets on inactive chains should stay informed about upcoming upgrades.

ZeroLend will use the LINEA airdrop allocation to partially refund affected LBTC suppliers on the Base chain. Those impacted are encouraged to contact support via official channels to coordinate next steps.

The protocol's shutdown is part of a broader trend in the DeFi sector. Similar challenges have led to the wind-down of other projects. ZeroLend aims to close operations responsibly and transparently.