Alpaca Finance, a pioneering decentralized finance (DeFi) protocol on the BNB Chain and Fantom network, has announced the gradual closure of all its operations after four years in the market. The team cited long-term financial difficulties, changing market conditions, increased competition, and the delisting of the $ALPACA token from Binance as primary reasons for this decision.
Launched in early 2021 without any pre-sale, venture capital funding, or pre-mine, Alpaca Finance built its reputation by innovating leveraged yield farming products and quickly became a leading protocol on BNB Chain. At its peak in early 2022, the platform reached a total value locked (TVL) exceeding $900 million.
However, since then, the platform has experienced a significant decline in TVL, which currently stands at around $54.6 million, along with lower yields and revenue. Despite responding with product expansions such as Automated Vaults, a stablecoin (AUSD), and a decentralized perpetual exchange (Alperp), the team was unable to reverse the losses. Alpaca Finance operated at a loss for over two years despite downsizing efforts.
A critical blow came when Binance, the world’s largest cryptocurrency exchange, delisted the $ALPACA token. This move restricted token accessibility and impaired Alpaca Finance’s ability to deploy remaining funds effectively, accelerating the decision to wind down operations.
The closure plan includes ceasing new leveraged farming positions by early June 2025, automatic closing of all remaining positions by the end of June or July, and halting buyback and burn programs. The platform interface will remain live until December 31, 2025, to allow users to withdraw their assets securely. Governance Vault stakers will receive any remaining protocol revenue.
Alpaca Finance’s founders expressed gratitude to their community and acknowledged the challenges of operating in a maturing and competitive DeFi landscape without venture capital backing or fresh capital injection. The closure underscores the difficulties faced by DeFi protocols amid evolving market dynamics and reduced demand for traditional yield farming models.