DeFi Protocol ZeroLend Shuts Down Citing Hacks, Thin Margins
What happened
DeFi lending protocol ZeroLend has announced its shutdown after three years of operation. The team cited inactive chains, thin margins, and rising security threats as reasons for the closure. Victims of a February 2025 exploit on Base will receive partial refunds from a separate token allocation.
Why it matters
- The protocol's Total Value Locked (TVL) collapsed by 98%, from a peak of nearly $359 million in November 2024 to $6.6 million at the time of the shutdown announcement. - Founder "Ryker" attributed the shutdown to several Ethereum layer-2 networks becoming "inactive" or "significantly less liquid," specifically naming Manta, Zircuit, and X Layer. - A key operational failure was oracle providers discontinuing support for some of the chains ZeroLend operated on, making it impossible to run lending markets reliably. - The February 2025 exploit on Base involved an attacker using a forged, worthless Lombard Staked Bitcoin (LBTC) token as collateral to drain the lending pools. - Victims of the LBTC exploit on Base will receive partial refunds funded by the team's airdrop allocation of LINEA tokens. - In response to the shutdown, the protocol's native token, ZERO, dropped 34% in 24 hours and has lost nearly all of its value since its peak in May 2024. - To prevent further losses and facilitate withdrawals, the team set the loan-to-value (LTV) ratio to 0% across most markets, effectively halting new borrowing. - For assets stuck on chains with severely depleted liquidity, the team is planning a smart contract upgrade via a timelock to help redistribute and recover user funds.
Key numbers
- Victims of a February 2025 exploit on Base will receive partial refunds from a separate token allocation.
- - The protocol's Total Value Locked (TVL) collapsed by 98%, from a peak of nearly $359 million in November 2024 to $6.6 million at the time of the shutdown announcement.
- Founder "Ryker" attributed the shutdown to several Ethereum layer-2 networks becoming "inactive" or "significantly less liquid," specifically naming Manta, Zircuit, and X Layer.
- The February 2025 exploit on Base involved an attacker using a forged, worthless Lombard Staked Bitcoin (LBTC) token as collateral to drain the lending pools.
What happens next
- Victims of the LBTC exploit on Base will receive partial refunds funded by the team's airdrop allocation of LINEA tokens.
- In response to the shutdown, the protocol's native token, ZERO, dropped 34% in 24 hours and has lost nearly all of its value since its peak in May 2024.
- Victims of a February 2025 exploit on Base will receive partial refunds from a separate token allocation.
Quick answers
What happened in DeFi Protocol ZeroLend Shuts Down Citing Hacks, Thin Margins?
DeFi lending protocol ZeroLend has announced its shutdown after three years of operation. The team cited inactive chains, thin margins, and rising security threats as reasons for the closure. Victims of a February 2025 exploit on Base will receive partial refunds from a separate token allocation.
Why does DeFi Protocol ZeroLend Shuts Down Citing Hacks, Thin Margins matter?
The protocol's Total Value Locked (TVL) collapsed by 98%, from a peak of nearly $359 million in November 2024 to $6.6 million at the time of the shutdown announcement. Founder "Ryker" attributed the shutdown to several Ethereum layer-2 networks becoming "inactive" or "significantly less liquid," specifically naming Manta, Zircuit, and X Layer. A key operational failure was oracle providers discontinuing support for some of the chains ZeroLend operated on, making it impossible to run lending markets reliably. The February 2025 exploit on Base involved an attacker using a forged, worthless Lombard Staked Bitcoin (LBTC) token as collateral to drain the lending pools. Victims of the LBTC exploit on Base will receive partial refunds funded by the team's airdrop allocation of LINEA tokens. In response to the shutdown, the protocol's native token, ZERO, dropped 34% in 24 hours and has lost nearly all of its value since its peak in May 2024. To prevent further losses and facilitate withdrawals, the team set the loan-to-value (LTV) ratio to 0% across most markets, effectively halting new borrowing. For assets stuck on chains with severely depleted liquidity, the team is planning a smart contract upgrade via a timelock to help redistribute and recover user funds.
