Zest Protocol recorded a sharp rise in lending on its Stacks V2 market in the third quarter of 2026. Outstanding loans climbed 132% to $14.75 million by the end of the quarter, according to an on-chain analysis from Alea Research.
The report separates price effects from real demand. About $6.20 million of the increase came from net new borrowing. Another $2.18 million came from higher token prices. That distinction matters because token price moves can inflate loan values without new users or new capital entering the market.
Borrowing peaked after quarter end
Activity did not stop when the quarter closed. In early October, borrows on the Stacks market passed an all-time high above $40 million. The peak did not last. By early November 2026, active loans had settled at roughly $25 million. Total value locked stood near $46.6 million.
The TVL path was uneven too. The Stacks market reached $87.28 million in early October, an 18.2% gain from September. It then fell back to the November level. Revenue remains modest. Cumulative fees passed $540,000 as of early November 2026.
Vaults and liquidations
On September 23, 2026, Zest launched a mainnet demo of its Bitcoin Collateral Vaults. The product lets users deposit native BTC into self-custodial vaults and borrow USDC on Ethereum. There is no wrapping or bridging involved. By early November, users had opened 135 vaults.
The protocol also points to its liquidation record. Since its Stacks market went live in March 2024, Zest has processed more than 1,500 liquidations with zero bad debt.
A pause and a wider pattern
On October 30, 2026, Zest paused new lending. It cited external market conditions, specifically a security incident involving Binance. Alea Research frames the move as part of a broader pattern in DeFi, where protocols pause or tighten operations when outside shocks hit.
Zest was founded in 2023 out of work at Trust Machines. Its Stacks market launched in March 2024. The V2 upgrade arrived in early 2026 and introduced risk groups, a mechanism aimed at improving capital efficiency while keeping risk in check.
What the numbers show
The post-peak drop is worth watching. Borrows fell from above $40 million to about $25 million, and TVL slid from $87.28 million to around $46.6 million in roughly a month. The revenue base is still small next to larger DeFi lending names. For Bitcoin lending, Zest’s quarter shows both growing demand and how quickly market conditions can change.
