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Zerolend, a multichain decentralized lending protocol, announced it will shut down its lending markets after approximately three years of operations. The team cited unsustainable conditions across supported chains, including inactivity or sharp liquidity drops, oracle providers discontinuing support, hacks and exploits, and thin profit margins that led to prolonged losses.
To limit further exposure, Zerolend set most markets’ loan-to-value (LTV) ratios to 0%, disabling new borrowing while allowing withdrawals. The team urged users to withdraw funds immediately through the app.
For assets that may be stuck in low-liquidity chains, the protocol said it would provide upgrades intended to enable recovery.
Zerolend launched in early 2024 and expanded to Layer 2 networks including Linea and zkSync. Its current total value locked (TVL) is $6.6 million, which the team described as near all-time lows following the wind-down announcement.
The protocol characterized the shutdown as an effort to end operations “honorably,” rather than closing abruptly and potentially shocking users.
Zerolend’s decision follows other DeFi protocols that have shut down or restructured. Polynomial, a DeFi derivatives protocol, said it ceased operations around February 14, 2026. Its shutdown included forced liquidations, closure of a liquidity layer, and full chain termination. Polynomial previously planned a token generation event (TGE) for Q1 2026, but shelved it after concluding the product lacked viability. The team said it will redirect efforts toward new projects, with priority for early backers.
Alpaca Finance, a leveraged yield farming and lending protocol on BNB Chain, announced plans to fully sunset activities by the end of 2025, citing revenue struggles and delisting from major exchanges including Binance.
Elixir’s deUSD shut down after accumulating heavy losses tied to the $93 million collapse of Stream Finance, a protocol it was connected with.
Analysts described these closures as “natural pruning” in a maturing environment rather than a mass exodus. They noted that many shutdowns involve smaller-scale protocols, while larger, more established projects continue attracting capital and user activity.
The pattern, according to the same framing, suggests the DeFi sector is consolidating around protocols with sustainable unit economics and resilient infrastructure, rather than maintaining a proliferation of marginal products that cannot cover operational costs or withstand market stress.
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