Alpaca Finance Shuts Down After 4 Years in DeFi Space

Alpaca Finance, a prominent player in the decentralized finance (DeFi) space, has announced its decision to wind down operations after a four-year journey marked by significant highs and lows in the crypto industry. The decision, made after extensive internal deliberation, aims to safeguard the community and ensure a graceful and secure wind-down of all its products.

The journey of Alpaca Finance began in early 2021 with the launch of its leveraged yield farming product, which quickly gained traction as DeFi blossomed on the BNB Chain. Within months, Alpaca became one of the cornerstone protocols on the BNB Chain, introducing numerous innovations and improvements. However, the landscape shifted with the launch of concentrated liquidity AMMs, which embedded inherent leverage, making traditional leveraged yield farming less compelling and more difficult to do profitably.

Despite these challenges, Alpaca continued to innovate with new iterations such as Automated Vaults (AVs), a stablecoin (AUSD), and a decentralized perpetual exchange (Alperp). However, the broader market remained muted, with suppressed yields and declining activities making these products increasingly unviable. More recently, Alpaca explored strategic paths forward, including serious M&A discussions with several other projects. Some conversations progressed meaningfully, but ultimately, as the market turned downward again in early 2025, these deals fell through.

Alpaca Finance was a fair launch project with no pre-mine or VC funding, and its operational runway was always tied directly to protocol revenue. With TVL and yields declining, revenue followed suit. The team has been operating at a loss for over two years, even after significant downsizing. Continuing under these conditions is simply not sustainable. The recent delisting of ALPACA from Binance was another major blow, limiting token accessibility and restricting the ability to deploy the remaining warchest effectively toward any new initiatives.

The DeFi landscape has evolved dramatically, becoming more competitive and saturated, often favoring large, capitalized players with new token supplies to give away. At this stage, Alpaca no longer sees a viable opportunity within the team’s circle of competence that justifies further pursuit. The wind-down process will be orderly and secure, with specific sequences determined for each product. Users are encouraged to close their positions and withdraw their assets as soon as possible.

For AF1.0 (The original LYF), new positions for all farms will be disabled by the first week of June 2025, with any remaining active positions automatically closed by 30 June 2025. For Automated Vaults (AV), all strategies will stop immediately, with loans repaid and assets converted into their base token. Alperp will shift into a reduced-only mode immediately, with any remaining active positions automatically closed by 30 June 2025. For AF2.0 (Money Market), borrowing will be disabled, with users encouraged to repay their loans and close out their positions. Any remaining active positions will be automatically closed by 30 July 2025. The weekly buyback & burn will stop, with the buyback portion of the revenue redirected to Governance Vault stakers for the remainder of operations. Access to Alpaca Finance’s front-end will be maintained through 31st December 2025 to provide time for users to withdraw their assets conveniently.

Looking back, Alpaca Finance is incredibly proud of what it achieved, from becoming a top protocol on BNB Chain to helping define leveraged yield farming in DeFi’s early days. The journey was made possible by the incredible support of the community. To the users, the team expresses gratitude for believing in them, farming with them, and sticking with them through the highs and lows. To the team, past and present, the company thanks them for their relentless dedication, integrity, and heart. While Alpaca is coming to its final chapter, the company hopes its work leaves a small mark on the evolution of DeFi, and that the ideas and lessons shared will continue to live on in future projects. Any important updates during the wind-down process will be shared via official social channels.