17th February, 2026 – Crypto Protocol ZeroLend, launched in early 2023, announced its full shutdown, saying the project is no longer sustainable. The team blamed falling liquidity, lost oracle support, thin margins, and rising security costs that made the model unprofitable. It is the third major DeFi lending shutdown in 10 days, after Polynomial and Alpaca Finance. Users are urged to withdraw assets immediately before LTV moves to 0% and TVL falls to zero.
High Signal Summary For A Quick Glance
- ZeroLend is shutting down after three years due to an unsustainable business model and weak liquidity.
- Loss of oracle support and rising security costs accelerated the decision to close operations.
- This is not a systemic DeFi failure, but reinforces that weaker lending models struggle to survive.
- Major protocols like Aave, Compound, and Morpho may benefit from liquidity consolidation.
- Retail traders: Must withdraw funds promptly or risk being stuck during shutdown processes.
- Long-term holders: ZERO token holders face steep losses as utility and demand disappear.
- Institutions: Funds and DAOs may need to rebalance portfolios and realize losses.
- Builders: Projects integrated with ZeroLend must migrate infrastructure, increasing costs and risks.
Why ZeroLend Is Shutting Down After Three Years
ZeroLend, a multi-chain DeFi lending Crypto Protocol launched in early 2023 announced that it will gradually shut down after three years of operation. The team said several issues hit at once: liquidity on some supported blockchains dried up, major oracle providers withdrew support, profit margins remained extremely thin, and security risks like hacks and fraud increased as total value locked (TVL) grew. The protocol also operated at a loss for long periods, leading the team to conclude that the business model is “no longer sustainable.”
ZeroLend’s closure follows a broader trend in the DeFi lending and derivatives sector. Alpaca Finance shut down in May 2025, and Polynomial closed on February 14, 2026, both citing similar problems such as weak profitability, shrinking liquidity, and intense competition. In those cases, token prices dropped sharply after the announcements, TVL quickly declined, and neither project saw a meaningful recovery, a pattern that has repeated several times in the lending space.
Key milestones leading to ZeroLend’s shutdown and protocol wind-down
ZeroLend protocol launches
ZeroLend debuts as a multi-chain DeFi lending platform on zkSync and other Layer 2 networks, rapidly becoming one of the largest lending protocols in those ecosystems.
ZERO governance token launches
The ZERO token launches in late April/early May, boosting protocol visibility and driving early TVL growth and user participation.
Alpaca Finance shutdown sets precedent
Major DeFi lending protocol Alpaca Finance announces its closure, highlighting sustainability challenges across the sector.
Polynomial protocol shuts down
DeFi derivatives platform Polynomial ceases operations and cancels its token launch, citing similar sustainability issues.
ZeroLend announces shutdown
The ZeroLend team officially declares the protocol no longer sustainable and begins an orderly wind-down after three years of operation.
Emergency withdrawals initiated
Loan-to-value ratios drop to 0% across most markets, and users are urged to withdraw all assets before total value locked reaches zero.
What the Headlines Missed
Crypto Protocol ZeroLend’s announcement does not mention any compensation, buyback, migration support, or airdrop for ZERO token holders and long-term liquidity providers. Unlike some past shutdowns that offered small recovery tokens, around 40,000 holders are now left with a token that will soon have no utility. Many retail users could face total losses with no recovery plan announced.
Most reports also did not highlight that an exploit affected the LBTC market on Base in February 2025 without public disclosure at the time. In addition, early supported chains like Manta and Zircuit had been losing liquidity for months before oracle providers withdrew support. This ongoing decline suggests the shutdown was not sudden, but the result of long building pressure.
What Readers Should Watch Next
ZERO token price (next 24 to 72 hours): A 40 to 70 percent drop is possible as utility disappears. Watch trading activity on Binance, Gate, and Uniswap pairs.
TVL drain and withdrawals: Monitor dashboards closely. Most markets are already at 0 percent LTV. Look out for withdrawal delays or reports of stuck funds on Discord or Telegram.
Capital migration flows: Track where the roughly 180 million dollars in TVL moves next. Watch for sudden TVL increases on Aave, Morpho, Compound, and Spark on the same chains.
Next dominoes in lending: Pay attention to warning signs from other mid-tier protocols like Radiant and LayerBank, as more shutdowns could follow.
