zkLend Shuts Down After $9.5 Million Hack, User Compensation Fund Established

zkLend, a project within the Starknet ecosystem, has announced its decision to gradually shut down operations. The announcement, made through social media, underscored the gravity of the decision, which was not taken lightly. Over the past few months, zkLend has faced significant challenges, including a severe security breach that eroded user confidence and the delisting of the ZEND token from major exchanges such as Bybit and KuCoin. These events have restricted the token's liquidity and accessibility, making it difficult for zkLend to allocate resources effectively for new initiatives.

The project has decided to use the remaining $200,000 in its treasury fund to establish a user compensation fund. This decision was made in lieu of restarting the money market or continuing development, as it is deemed more responsible and practical under the current circumstances. The team will continue to be active and will focus on recovering previously stolen assets.

Previously, zkLend experienced a significant security breach on February 12th, resulting in a loss of over $9.5 million. This incident has had a profound impact on the project's operations and user trust, contributing to the decision to shut down.