Decentralised lending protocol Zerolend has decided to halt operations, Cointelegraph reported on Feb. 17 local time.

Zerolend, which was active on Ethereum layer-2 blockchains, concluded it was not sustainable due to a decline in users and a lack of liquidity.

Zerolend founder Ryker said on social media platform X, formerly known as Twitter, "I have operated the protocol for 3 years, but it is no longer sustainable."

Ryker said some of the blockchains it operated on had been disabled or saw liquidity plunge. He added that oracle providers stopped support, making it difficult to operate markets and generate revenue. He also said that as the protocol grew it became a target for hackers and scammers, and that thin margins and high risk led to losses over the long term.

To help users recover assets, Zerolend is upgrading its smart contracts, but some assets remain locked on blockchains where liquidity has plunged. Zerolend is also tracking assets as part of efforts to recover from a hack on the Base blockchain in February last year. The attack caused losses in a bitcoin lending product, and affected users are set to receive partial refunds using an airdrop allocation.

Zerolend's total value locked, which once stood at $359 million, has plunged to about $6.6 million.