Alpaca Finance, a former titan of the decentralized finance (DeFi) space on the BNB Chain, faces the end of its journey. The protocol announced that it will cease operations by the close of 2025, citing an unsustainable business model that struggled to keep pace in an increasingly competitive and capital-hungry DeFi environment. This decision marks the end of a significant chapter for a platform that once stood at the forefront of leveraged yield farming.
The Rise and Fall of a DeFi Pioneer
Alpaca Finance emerged during the DeFi explosion of 2021, quickly carving out a niche with its leveraged yield farming strategies. Users flocked to the platform, eager to amplify their returns by borrowing capital to farm liquidity pool tokens. At its zenith, Alpaca boasted over $1 billion in total value locked (TVL) and ranked among the most utilized protocols on the BNB Chain. But the landscape has changed drastically in the years since.
The platform’s ambitious fair launch structure, devoid of venture capital backing or pre-mined tokens, made it vulnerable to market volatility. Revenues, intrinsically linked to protocol usage, dwindled as competition intensified and DeFi’s capital requirements soared. These factors, combined with a lack of strategic partnerships, rendered Alpaca’s business model untenable. “This choice wasn’t made lightly,” the Alpaca team shared in their announcement. “But we believe it is the most responsible course of action to safeguard our community and ensure a graceful and secure wind-down.” This mirrors a broader trend where crypto token failures have soared, with many projects launched since 2021 facing similar challenges.
Binance Delisting: The Final Blow
A pivotal moment came in April, when Binance delisted ALPACA, the protocol’s native token. This event sparked a temporary 550% price surge, fueled by short liquidations that saw $55 million in forced closures in a single day. However, the delisting brought long-term consequences, severely restricting liquidity and user access to the token. This made it increasingly challenging for Alpaca to pursue new initiatives or engage in meaningful mergers and acquisitions.
“We explored M&A discussions with several projects, and some progressed meaningfully,” the Alpaca team disclosed. “But as the market turned downward again in early 2025, those deals fell through.” As of today, ALPACA trades at roughly $0.08, a stark decline of over 90% from its all-time high in 2021—a testament to the volatility and unforgiving nature of the crypto markets. In contrast, some new entrants like the Tokenized Apollo Credit Fund are making waves with innovative strategies, highlighting the evolving landscape of DeFi.
A Reflection of Broader Market Trends
Alpaca’s trajectory reflects broader trends in the DeFi sector, where early pioneers often find themselves outpaced by newer, more adaptable entrants. The protocol’s struggles underscore the importance of strategic flexibility and robust financial backing in navigating the DeFi landscape’s ebbs and flows. As front-end access remains available until December 31, 2025, users will have time to withdraw their assets, ensuring a secure exit for the community.
The shutdown of Alpaca raises questions about the future of DeFi on the BNB Chain and whether other early leaders might face similar fates as market dynamics continue to evolve. While Alpaca’s exit marks a significant shift, it also serves as a reminder of the resilience required to thrive in the rapidly changing world of decentralized finance.
As the crypto community reflects on Alpaca’s legacy, the focus shifts to the next generation of DeFi protocols that might learn from these lessons—seeking innovative ways to adapt, survive, and ultimately flourish in the ever-competitive digital finance arena.
Source
This article is based on: Alpaca Finance, Once a DeFi Giant on BNB Chain, Will Shut Down
Further Reading
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Steve Gregory is a lawyer in the United States who specializes in licensing for cryptocurrency companies and products. Steve began his career as an attorney in 2015 but made the switch to working in cryptocurrency full time shortly after joining the original team at Gemini Trust Company, an early cryptocurrency exchange based in New York City. Steve then joined CEX.io and was able to launch their regulated US-based cryptocurrency. Steve then went on to become the CEO at currency.com when he ran for four years and was able to lead currency.com to being fully acquired in 2025.
