ZeroLend, a decentralized lending protocol operating across multiple blockchains, has announced its decision to cease operations after three years. This closure stems from sustained losses and a challenging market environment, rendering the platform unviable.
At its height in November 2024, ZeroLend boasted approximately $359 million in user deposits, as highlighted by DefiLlama data. However, this amount has drastically diminished to roughly $6.6 million spread across platforms such as Linea, Ethereum, and ZKsync Era, alongside minor amounts on various other networks.
In the fiscal year of 2025, ZeroLend achieved gross revenues of $3.1 million; however, that figure has dropped alarmingly to only about $355,000 in the current year. Issues contributing to this decline include inactive early-stage chains, the halting of oracle support, intensifying security threats, and narrow lending margins.
Adjusted lending conditions forced many markets to set their loan-to-value ratios at zero percent, prompting users to withdraw their funds immediately. For those with assets locked in networks such as Manta, Zircuit, and xLayer, the company has plans to implement a smart contract upgrade to redistribute these locked assets. LBTC providers on the Base network are also set to receive partial refunds associated with an airdrop allocation on Linea.
It is essential to note that holders of the ZERO governance token will not have access to any recovery mechanisms, as the token has plummeted by 34% in just one day, trading near zero. Diego Martin, CEO of Yellow Capital, commented on how ZeroLend's shutdown highlights systemic weaknesses within crypto markets. He noted that fragmented liquidity across various exchanges and blockchains creates pricing instability, which limits long-term adoption despite increasing interest from institutional investors.