Decentralized lending protocol ZeroLend shuts down effective immediately, founder “Ryker” announced after three years concentrating on Ethereum Layer 2 networks. ZeroLend’s demise has been attributed to multiple factors, including a lack of liquidity in Chain 2s, oracle players abandoning support, and increased focus by hackers on potentially profitable targets, which have created an environment that will not support sustainable revenue.
The Death Spiral That Killed ZeroLend
ZeroLend’s financials present grim facts. Current total value locked (TVL) as ZeroLend shuts down is USD 6.5 million; a shocking 98% decline from the Nov 2024 peak of USD 359 million. Revenue from the protocol shows similar trends: 2025 earnings were USD 1.17 million, and so far in 2026, there have been USD 132,290 in earnings.
According to founder Ryker, the reason for ZeroLend’s demise was the collapse of the Layer 2 (L2) ecosystems that were intended to support it. “Multiple blockchains have become significantly less liquid, or they are completely inactive,” he stated. Oracle players pulling their support meant that there was no longer a reliable way for ZeroLend to operate in any given market; combined with the meager amounts being earned on loans, this resulted in continued losses. Even Vitalik Buterin’s recent comments about his L2 scaling vision not making any more sense have reverberated throughout the ruins of ZeroLend.
Access to Funds and Partial Refunds for Users
When using ZeroLend, the priority of users is to withdraw their assets. Currently, due to a lack of liquidity in most markets, the amount of assets that may be withdrawn from Loan-to-Value (LTV) is zero. Unfortunately for all users still having assets stranded on Manta, Zircuit, and XLayer (for example), the process for returning them takes longer than expected due to ZeroLend’s plans to perform timelock upgrades to redistribute the stuck capital.
In addition, victims of the February 2025 LBTC exploit on the Base chain will only receive partial refunds funded by the LINEA airdrop allocation given to the ZeroLend team to compensate users for their loss. ZERO token holders will not have any recovery path.
ZeroLend (ZERO) Token Price
“The ZeroLend journey is over,” Ryker said. The ZERO token has dropped around 37% in only 24 hours, trading at USD 0.00000077 at the time of writing, taking with it almost all the value during its peak period in May 2024.
