Lending Protocol ZeroLend Can't Hold On! TVL Vanishes 98%, Remaining $6.6 Million, Three Years of Operation Can't Withstand Chain Exhaustion

Decentralized lending protocol ZeroLend announced on February 16th that after three years of operation, it will cease all business activities. The team stated that multiple early-supported blockchains have become inactive or experienced significant liquidity shrinkage, oracle providers have stopped support, and frequent hacker attacks have led to long-term losses that make continued operation impossible. ZeroLend’s TVL has plummeted from a peak of nearly $359 million to just $6.6 million, a decrease of over 98%.
(Background: What is modular lending, and will it become the next DeFi hotspot?)
(Additional context: Detailed explanation of DeFi lending “liquidation mechanisms”: risk overview of Compound, Maker, AAVE)

Table of Contents

• The Four Main Causes of Death: Chain Depletion, Oracle Disruption, Hacker Attacks, Zero Profits
• TVL Dropped from $359 Million to $6.6 Million
• Some Funds May Be Trapped: Attention for Manta, Zircuit, XLayer Users
• The Harsh Reality of DeFi Lending

Multi-chain decentralized lending protocol ZeroLend issued an official announcement on February 16th, revealing a “difficult decision”—to terminate the protocol after three years of operation. The team admitted that the protocol has been in long-term loss and cannot sustain operations under multiple pressures. Currently, most market loan-to-value ratios (LTV) have been set to 0%, effectively prohibiting new borrowing, and only allowing users to withdraw funds.

The Four Main Causes of Death: Chain Depletion, Oracle Disruption, Hacker Attacks, Zero Profits

ZeroLend detailed four reasons for its closure in the announcement:

• Support chains become inactive: Several early deployed blockchains supported by ZeroLend have become inactive or experienced significant liquidity shrinkage, rendering the protocol’s operations on these chains essentially meaningless.
• Oracle providers cease support: Disruption of price data sources directly impacts the core lending and liquidation mechanisms of the protocol.
• Increase in hacker and scam attacks: The inherently high-risk nature of lending protocols makes them frequent targets for attacks.
• Thin profit margins lead to long-term losses: The profit space for lending protocols is extremely limited; combined with the above pressures, the situation worsens.

TVL Dropped from $359 Million to $6.6 Million

According to data from DefiLlama, ZeroLend’s total value locked (TVL) peaked at nearly $359 million in November 2024, but has since declined sharply, now remaining around $6.6 million, an evaporation of over 98%. This data vividly reflects the liquidity exhaustion across multiple chains.

Some Funds May Be Trapped: Attention for Manta, Zircuit, XLayer Users

ZeroLend strongly recommends users withdraw remaining funds from the platform as soon as possible via the official app. However, not all users can withdraw smoothly—on chains like Manta, Zircuit, and XLayer, where liquidity has severely deteriorated, some funds are currently locked and tied to inactive positions.

The team stated that solutions are being developed for these affected assets, including executing time lock upgrades to reallocate funds. However, specific timelines and details have not yet been announced, and whether trapped users can recover their full funds remains uncertain.

The Harsh Reality of DeFi Lending

ZeroLend’s collapse is not an isolated case but a reflection of the brutal reshuffling in the DeFi lending space. In this sector, major protocols like Aave and Compound already dominate most of the market share. Smaller protocols struggle to survive in a razor-thin profit margin environment, while also facing high maintenance costs across multiple chains, oracle dependency risks, and ongoing security threats.

For users holding assets on ZeroLend, the immediate priority is to withdraw funds from the platform and closely monitor any subsequent announcements regarding solutions for trapped assets.