Alpaca Finance, which once rose in the decentralized finance (DeFi) craze and became famous for leveraged yield farming, has officially announced that it will shut down operations at the end of 2025. The team admitted that in the DeFi ecosystem with increasingly fierce competition and rising capital thresholds, the current business model is no longer sustainable.
The Alpaca Finance team stated in a statement on Monday that it will gradually shut down all of its products in the coming months, including the earlier launched leveraged mining platform, automated funding pool, and decentralized perpetual contracts. To protect the rights and interests of users, the front-end interface will be maintained until December 31, 2025, allowing users time to complete asset withdrawals.
“This is not a decision taken lightly,” Alpaca Finance wrote in a statement, “but we believe it is the most responsible approach to protect the safety of community assets and ensure a smooth and secure exit process.”
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. This choice wasn’t made lightly, but we believe it is the most responsible course… pic.twitter.com/kwLXv87BsR
— Alpaca Finance δ0 (@AlpacaFinance) May 26, 2025
Alpaca Finance was founded during the DeFi boom in 2021. It quickly became popular on BNB Chain (formerly known as BSC, Binance Smart Chain) with its leveraged liquidity mining mechanism, allowing users to use borrowed funds to amplify liquidity mining rewards. At its peak, the platform's total locked value (TVL) exceeded US$1 billion.
However, the team pointed out that Alpaca Finance has actually been losing money for two consecutive years. Its main income is highly dependent on the usage of the protocol. Also, because it adopts a "fair launch" structure, it has neither venture capital injection nor pre-sale or pre-mining financing. Its financial flexibility is limited and it will be difficult to sustain in the long run.
The last straw that broke the camel’s back was Binance’s decision to delist Alpaca Finance’s native token ALPACA at the end of April this year. Although the token soared 550% in a short period of time due to the forced liquidation of short positions and $55 million was forced liquidated in a single day as soon as the news came out, it also severely damaged market confidence and greatly compressed token liquidity and user access channels.
The team pointed out that after Binance was delisted, many potential new products and mergers and acquisitions (M&A) were forced to be suspended, and subsequent layout was completely blocked:
We had been in M&A negotiations with several projects, and some discussions had made substantial progress, but the market weakened again in early 2025, which ultimately led to the failure of all these plans.
As of writing, the ALPACA token price is $0.1112, down more than 98% from its 2021 all-time high of $8.78.
The article "Alpaca Finance announced its closure at the end of the year, and the former BNB Chain star project quietly exited the stage" was first published on (Block Guest).