ALPACA Token Falls Over 30% Following Alpaca Finance’s Shutdown Announcement

Alpaca Finance, a decentralized finance (DeFi) lending protocol on the BNB Chain and Fantom, has announced the gradual closure of its platform and all associated products. 

The decision, revealed on May 26, comes after what the team described as “extensive internal deliberation and evaluation of future development directions.” 

Alpaca Finance Announces Shutdown 

Launched with no pre-sale, venture capital funding, or pre-mine, Alpaca Finance allowed users to open leveraged positions by borrowing from deposit vaults. However, the protocol has faced mounting challenges recently, culminating in this closure announcement.

In an official statement on their Medium blog and their X (formerly Twitter) account, the team cited ongoing financial difficulties as the primary reason for the shutdown. 

“In truth, the team has been operating at a loss for over two years, even after significant downsizing of the team. Continuing under these conditions is simply not sustainable,” the blog read.

DefiLama data showed that Alpaca Finance’s Total Value Locked (TVL) reached a record high of over $900 million in early 2022. However, since then, it has faced a continued decline. As of the latest data, the TVL stood at just $54.6 million.

“With TVL and yields declining, revenue followed suit,” the team added.

The team also cited increased competition and market saturation as key drivers behind its decision. Notably, the announcement comes about a month after Binance announced the delisting of the platform’s native token, ALPACA. 

“The recent delisting of ALPACA from Binance was another major blow. It not only limits token accessibility but also restricts our ability to deploy our remaining warchest effectively toward any new initiatives,” Alpaca Finance shared.

Despite the delisting, the token’s value surged over 1,000% in the days following it, defying typical market behavior. ALPACA’s dramatic rally drew widespread attention and sparked concerns over market manipulation. 

Nonetheless, the gains were fleeting, and the latest news has pushed the price down further. BeInCrypto data showed that ALPACA’s price has depreciated by 32.1% over the past day. At the time of writing, the token’s trading price was $0.11.

Alpaca Finance has detailed a structured shutdown plan across all major product lines to ensure a smooth and secure exit for users. The platform will stop accepting new positions on the original leveraged yield farming platform (AF1.0) in early June. It will also automatically close all remaining positions by June 30, 2025.

The team has put Alperp, the perpetual trading product, into reduce-only mode. It will be shut down completely by the end of June.

Furthermore, they have halted all Automated Vaults immediately, converting any remaining funds into base tokens and returning them to users. Borrowing in the AF2.0 Money Market will be disabled, and open positions will close automatically by July 30, 2025.

The protocol will also end its buyback and burn program and distribute revenue to Governance Vault stakers. Lastly, the platform’s interface will remain available for users to withdraw assets until December 31, 2025.