Starknet-based L2 protocol zkLend shuts down

zkLend, a decentralized money lending protocol on Starknet, has announced that it is shutting down its operations.

The layer 2 money market lending protocol, built on the Starknet (STRK) network, revealed the development on June 25, a few months after suffering a nearly $10 million hack.

What happened?

zkLend lost over $9.5 million in the exploit that occurred on February 12, 2025. Per the latest update, the protocol has seemingly failed to recover from that attack, with the situation worsened by the delisting of ZEND.

According to the announcement the Starknet-based L2 shared on X, these two factors are central to the decision to cease operations.

“This decision was not made lightly,” zkLend posted. “Over recent months, the exploit we suffered has deeply eroded user confidence, and furthermore, the recent removal of ZEND from major exchanges such as Bybit and KuCoin has further constrained token liquidity and accessibility.”

In light of these challenges, zkLend found it difficult to “effectively allocate toward any new initiatives.”

As a result, the protocol is now shifting focus to user restitution. The $200,000 still held in treasury will be directed toward recovery efforts for users impacted by the hack. zkLend is keeping its DeFi Spring, recovery, and kSTRK portals open for unstaking or claims.

Crypto hacks

zkLend’s exploit is one of many crypto hacks to hit the industry in recent months, with security experts noting a significant increase in crypto thefts amid major breaches such as the $1.4 billion Bybit hack. In 2024, more than 160 incidents saw attackers steal over $2.3 billion, 40% more than the $1.69 billion lost to various attacks the previous year.

Exploits have often debilitated smaller projects, with native tokens plummeting to near zero amid market reaction. Recently, the Sui (SUI) token slumped amid a more than $220 million hack of the decentralized exchange protocol Cetus.

zkLend’s security breach also saw Starknet’s native token come under downside pressure. STRK currently trades around $0.11, down more than 28% in the past month and 84% over the past year.