Alpaca Finance Announces Full Shutdown After Sustained Losses, Binance Delisting, and Intense DeFi Competition

Alpaca Finance, once one of the leading DeFi protocols on the BNB Chain, has announced a full protocol shutdown after four years of operation. The Alpaca Finance closure brings a once-$1 billion ecosystem to an official end, highlighting the unforgiving evolution of the decentralized finance landscape.

In a detailed blog post, the team behind Alpaca Finance outlined the reasoning behind the wind-down, citing unsustainable revenue, rising competition, and shifting user behavior as central factors. What began as a fair launch project during the 2021 DeFi boom has, over the last two years, struggled to stay relevant amid a new wave of innovation.

“After extensive internal deliberation and a thorough evaluation of possible paths forward, we have made the incredibly difficult decision to begin sunsetting Alpaca Finance and all of its products,” the team wrote. “This choice wasn’t made lightly, but we believe it is the most responsible course of action to safeguard our community and ensure a graceful and secure wind-down.”

A Protocol That Defined DeFi’s Early Momentum

Alpaca Finance launched in early 2021 as a leveraged yield farming platform on BNB Chain. With no venture capital backing and no pre-mine, it quickly captured the attention of DeFi users seeking amplified yield in a fast-growing ecosystem. Its early success helped define what leveraged DeFi products could look like in a permissionless, fair-launch setting.

The protocol introduced multiple features over time, including Automated Vaults (AVs), a native stablecoin (AUSD), and a perpetuals exchange (Alperp). But despite this innovation, the broader market had changed. The rise of concentrated liquidity AMMs like Uniswap v3 introduced built-in leverage and greater capital efficiency, making Alpaca’s external leverage model less attractive.

“Traditional leveraged yield farming became significantly less compelling and much more difficult to do profitably,” the Alpaca team admitted.

The Fall: Declining Revenue, ALPACA Delisting, and Failed Deals

The Alpaca Finance wind-down follows a series of setbacks. The project had been operating at a loss for over two years, despite cost-cutting and product diversification. Efforts to secure a merger or acquisition reportedly made progress. However, talks collapsed in early 2025 as DeFi market conditions deteriorated again.

Adding to its struggles, Binance’s delisting of the ALPACA token was a major blow to both visibility and treasury management. The team acknowledged that the ALPACA token delisting “not only limits token accessibility but also restricts our ability to deploy our remaining warchest effectively.”

Following the Alpaca Finance shutdown announcement, the ALPACA token dropped nearly 30%, with its price falling to $0.11. The yield farming platform closure has since sent ripples across BNB Chain DeFi news. It has now raised questions about the sustainability of older DeFi models.

Sunset Timeline: What Users Need to Know

The team has laid out a clear schedule for the Alpaca Finance wind down:

• New positions in leveraged yield farming will be disabled in early June.
• All remaining positions will be automatically closed by June 30 for AF1.0 products, and by July 30 for the money market (AF2.0).
• Alperp has already been moved to “reduce-only” mode.
• Weekly buyback and burn programs have ceased, with remaining funds redirected to Governance Vault stakers.
• The front-end will remain online until December 31, 2025, to allow user withdrawals.

The team emphasized their commitment to a smooth exit:

“We are committed to maintaining and having the Alpaca Finance front-end running through 31st December 2025 to provide time for users to withdraw their assets conveniently.”

A Marker of DeFi Maturity—and Mortality

The Alpaca Finance closure serves as a stark reminder of the unforgiving nature of DeFi market competition. Even projects that once set benchmarks for innovation are vulnerable to obsolescence if they fail to adapt. As capital becomes more selective and liquidity flows into newer protocols with leaner models, mid-tier DeFi projects face existential pressure.

Alpaca’s journey encapsulates both the promise and the precarity of decentralized finance. Its team’s farewell reflects the bittersweet nature of this transition:

“While Alpaca is coming to its final chapter, we hope our work leaves a small mark on the evolution of DeFi, and that the ideas and lessons we shared will continue to live on in future projects.”

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Editorial Note: This news article has been written with assistance from AI. Edited & fact-checked by the Editorial Team.

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