Zerolend Shutters ‘no longer sustainable’ says founder
Decentralized lending protocol ZeroLend says it has shut down completely after experiencing low user numbers and liquidity on the blockchains it operates on.
After three years of building and using the protocol, we've made the difficult decision to simplify operations, Zeroland's founder, known as “Riker,” said in a post shared to X on Monday.
“Despite the group's continued efforts, it has become clear that the protocol is unsustainable in its current state,” he added.
ZeroLend focuses its services on Ethereum Layer-2 blockchains, which was once considered a central part of Ethereum co-founder Vitalik Buterin's plan to keep the network scalable and competitive.
However, Buterin said earlier this month that Layer 2's scaling view “doesn't make sense anymore,” that many fail to properly follow Ethereum's security, and that scaling should increasingly come from the original and native wrappers.
Zeroland operates at a loss because of liquid chains, Riker says
ZeroLend's Ryker said the reason for the shutdown was that many of the blockchains supported by the protocol had become “inactive or much less liquid.”
He added that in some cases, voice providers — services that bring data and are often critical to running protocols — are stopping support on some networks, “making it difficult to operate markets reliably or generate ongoing revenue.”
“At the same time, as the protocol has grown, it has attracted a lot of attention from malicious actors, including hackers and fraudsters,” Ryker said. “Combined with the inherently thin margins and high risk profile of credit protocols, this has resulted in long periods of time where the protocol has been operating at a loss.”
The protocol allows users to withdraw their assets, he said, adding, “We strongly encourage all users to withdraw any remaining funds from the platform.”
Riker said some user funds could be locked on blockchains that have seen “severely corrupted” liquidity, and ZeroLend said it would modify the protocol's smart contracts for the purpose of redistributing frozen assets.
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They added that Zeroland is working to trace and recover funds linked to an exploit in February last year, after the attacker drained credit pools that users of the Bitcoin (BTC) production protocol used on the Base blockchain.
Riker said suppliers affected by the disaster will receive partial refunds funded by the airdrop allocation received by the ZeroLend team.
In the year At its peak in November 2024, Zero Land had a total price of about $359 million locked in, but that has since dropped to $6.6 million, according to Defillama.
In response to the shutdown of the protocol, the ZeroLend (ZERO) token fell by 34% in the last 24 hours and almost lost its value after reaching a peak of one tenth of a penny in May 2024, according to CoinGecko.
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