Algofi will shut down its operations because it is unable to maintain the highest standards of the protocol.

Algorand’s [ALGO] Algofi, the largest decentralized finance (DeFi) protocol, is shutting down its operations. The blockchain platform recently announced the news on its blog.

Due to a "confluence of events", Algofi will cease its operations as it is unable to maintain the highest standards of the protocol. It will soon move to a withdrawal-only mode.

Algofi is a lending protocol based on the Layer-1 Algorand blockchain that allows users to earn interest, borrow, and trade their ALGO tokens.

The blog post states,

“The team feels that, going forward, we are no longer able to provide the necessary support to maintain the high standards of the protocol that we believe the community deserves. We will begin the process of shutting down the platform and placing the platform into withdrawal-only mode.”

Algofi will also disable all social media accounts except for the Discord channel to maintain the required communication. It will take several months to shut down Algofi's entire operations. In the meantime, the team will work to minimize the collateralization factor of the cryptocurrency markets on its platform, allowing liquidity to move to other protocols.

However, the team stressed its confidence in the Algorand blockchain technology and its novel consensus algorithm.

Shortly thereafter, the total value locked (TVL) on the Algorand network fell by more than 5% to approximately $58.94 million at press time.

Likewise, Algofi’s TVL dropped by more than 12%.

How ALGO is traded

Remember, in April, the U.S. Securities and Exchange Commission (SEC) charged crypto asset trading platform Bittrex with operating an unregistered national securities exchange, labeling ALGO and five other tokens as securities.

Although the Algorand Foundation disputed the SEC’s classification, market sentiment for the token has certainly been affected.

ALGO has lost more than 50% of its value since the regulator took enforcement action against Bittrex. However, the token has fared quite well amid the latest news from Algofi, with the token barely losing any of its value.

At press time, ALGO is changing hands at $0.1114.