Lending protocol zkLend acknowledged in a June 25 put up on X that it’ll wind down its operations and direct its remaining $200,000 treasury to a fund for customers affected by a February safety breach.
The workforce mentioned the exploit “deeply eroded consumer confidence” and ZEND’s delisting from Bybit and KuCoin amplified the unfavorable sentiment inflicting a major decline within the capital and liquidity wanted for brand spanking new merchandise.
Liquidity squeeze and choice to stop
Whereas zkLend assessed restoration choices, Bybit and KuCoin eliminated the ZEND token from their spot markets, sharply lowering buying and selling depth and slicing off a path to boost contemporary liquidity.
The workforce mentioned these constraints made a relaunch unrealistic. As a substitute, zkLend will preserve its DeFi Spring, restoration, and kSTRK portals on-line, permitting customers to unstake belongings or declare balances.
It additionally retained safety outfit zeroShadow to hint any remaining stolen cash, pledging to route future recoveries to the consumer fund.
zkLend plans to publish its refreshed, audited codebase as open-source “within the coming weeks” for any developer who needs to construct on the framework. The workforce added that it’ll “stay on-line and dedicated to the restoration of stolen funds by way of any means needed,” however won’t restart its money-market operations.
The choice marks the tip of zkLend’s four-year run on Starknet and formalizes the shift from rebuilding the protocol to compensating customers by way of the restoration pool.
Exploit drained 3,300 ETH
On Feb.12, an attacker used a precision rounding flaw in zkLend’s Starknet contracts to empty about 3,300 ETH, value roughly $9.5 million on the time. The exploiter bridged the belongings to Ethereum and routed them by way of the privateness software Railgun.
zkLend provided the exploiter a ten% bounty if 90% of the funds had been returned by February 14, warning that it might pursue authorized motion if the deadline handed. The funds by no means got here again, and the protocol halted withdrawals whereas it labored with safety agency Cyvers, legislation enforcement businesses, and on-chain investigators.
The investigation produced an sudden twist on April 1 when zkLend reported that the attacker misplaced 2,930 ETH to a phishing web site impersonating Twister Money.
Blockchain analytics agency Lookonchain confirmed the loss, and the attacker despatched an on-chain message admitting the error, stating he misplaced all of the funds. He added: “I’m devastated and sorry.”
The breach left customers locked out of their deposits, and the protocol’s repute suffered consequently.
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