Alpaca Finance to Shut Down After Years of Financial Struggles and Market Pressure

Alpaca Finance, a decentralized finance (DeFi) protocol on BNB Chain and Fantom, has announced its gradual shutdown. The team revealed the decision on May 26, citing long-term financial difficulties and increased competition.

No Longer Sustainable

In a public statement, the Alpaca team explained that operations have been running at a loss for more than two years. Despite significant downsizing, the protocol could not return to profitability.

“With TVL and yields declining, revenue followed suit,” the team said. “Continuing under these conditions is simply not sustainable.”

Alpaca Finance once reached a peak total value locked (TVL) of over $900 million in early 2022, according to DefiLlama. That number has since dropped to about $54.6 million, reflecting shrinking user activity and market share.

Binance Delisting Delivered a Final Blow

The announcement comes a month after Binance delisted ALPACA, the project’s native token. The team called the move a “major blow,” stating it reduced the token’s accessibility and hampered strategic flexibility.

While ALPACA briefly surged over 1,000% after the delisting, the rally quickly reversed. The token dropped by more than 30% in the past day and was last trading around $0.11.

Market observers speculated the price spike was driven by manipulation or speculative trading rather than fundamentals.

Shutdown Timeline

Alpaca Finance has laid out a detailed plan to wind down services:

• Early June 2025: New positions on the original leveraged yield farming platform (AF1.0) will be disabled.
• June 30, 2025: All remaining AF1.0 positions will be automatically closed.
• June 2025: Alperp, Alpaca’s perpetual trading platform, will shut down completely.
• Effective Immediately: Automated Vaults have been halted. Funds are being converted into base tokens and returned to users.
• July 30, 2025: Borrowing in the AF2.0 Money Market will be disabled. All open positions will auto-close.
• December 31, 2025: The platform’s interface will remain live until the end of the year for withdrawals.

Additionally, the protocol will terminate its buyback and burn program. Any remaining revenue will be distributed to Governance Vault stakers.

Broader Market Context

The DeFi landscape has become increasingly saturated and competitive. According to Alpaca, newer protocols with strong token incentives and larger treasuries have made it harder for legacy platforms to survive.