zkLend Shuts Down After $10 Million Exploit, Delists ZEND Token

Coin WorldWednesday, Jun 25, 2025 10:08 am ET
1min read

zkLend, a decentralized lending protocol operating on the Starknet blockchain, has declared its shutdown following a significant exploit in February 2025. The incident resulted in the loss of approximately $10 million and prompted major cryptocurrency exchanges to delist the protocol's native token, ZEND.

The protocol has decided to allocate its remaining treasury of $200,000 to establish a recovery fund aimed at assisting affected users. This decision comes instead of attempting to relaunch its money markets or continuing with further development. The protocol will continue to operate its DeFi Spring, recovery, and kSTRK portals, allowing users to unstake or claim their funds.

zkLend's team is actively collaborating with zeroShadow to trace and recover the lost funds. Any recovered assets will be directed to the user recovery fund. Additionally, the protocol plans to open-source its audited and updated codebase in the coming weeks, enabling interested parties to continue development.

This shutdown highlights the vulnerabilities and risks associated with decentralized finance (DeFi) protocols. The exploit not only resulted in significant financial losses but also eroded user trust in the protocol. The decision to allocate remaining funds to a recovery effort rather than attempting to restart operations underscores the severity of the incident and the challenges faced by DeFi platforms in maintaining security and user confidence.

The delisting of the ZEND token from major exchanges further complicates the situation, as it limits liquidity and access for users who may still hold the token. This move by exchanges is a protective measure to safeguard investors from potential further losses and to mitigate the risk associated with a compromised protocol.

The open-sourcing of zkLend's codebase is a positive step towards transparency and community involvement. By making the codebase available, the protocol allows developers and researchers to scrutinize the code, identify vulnerabilities, and potentially contribute to the development of more secure DeFi solutions. This approach can foster innovation and improve the overall security of the DeFi ecosystem.

In summary, the shutdown of zkLend following the February 2025 exploit serves as a stark reminder of the inherent risks in DeFi protocols. The protocol's decision to focus on user recovery and open-source its codebase demonstrates a commitment to transparency and community support, even in the face of significant challenges. The incident underscores the need for robust security measures and continuous vigilance in the rapidly evolving world of decentralized finance.

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