Alpaca Finance, once a leading decentralized finance (DeFi) protocol on BNB Chain, has announced plans to shut down its entire platform, including leveraged yield farming, stablecoin services, and its perpetual exchange, by the end of 2025. The decision comes after four years of operation and follows a steady decline in revenue, unsuccessful acquisition efforts, and the recent delisting of its native token, ALPACA, from Binance.
The news, shared in a blog post on May 27, triggered a sharp market reaction. The ALPACA token plunged nearly 30%, falling to $0.1126, as investor confidence waned.
A Difficult Decision Amid Market Headwinds
In the blog post, the Alpaca Finance team described the move as “incredibly difficult” but framed it as the most responsible course of action for the community. They cited prolonged operating losses, a shrinking user base, and product irrelevance in an evolving DeFi landscape.
“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,” the team wrote.
Alpaca Finance launched in early 2021, quickly gaining traction with its leveraged yield farming solution on BNB Chain. Over time, the protocol expanded to include automated vaults, the AUSD stablecoin, and a perpetual trading platform called Alperp.
However, the introduction of concentrated liquidity automated market makers (AMMs) drastically altered the yield farming ecosystem, making Alpaca’s core offerings less profitable and increasingly outdated.
Unsustainable Business Model and Failed M&A
The team acknowledged that Alpaca Finance had been operating at a loss for over two years, even after implementing cost-cutting measures. Despite efforts to merge or be acquired, all negotiations ultimately fell through amid worsening market conditions in early 2025.
The recent delisting of ALPACA from Binance compounded the situation. The team called the delisting “another major blow,” as it restricted access to the token and hampered efforts to pursue new strategies using the project’s remaining treasury.
Gradual Wind-Down Timeline
Alpaca Finance intends to conduct a phased shutdown of its products, with key steps occurring between June and December 2025. While specific dates are expected to be announced soon, the team stressed its commitment to a secure and transparent offboarding process for all users.
Legacy and Impact
Despite its decline, Alpaca Finance made a lasting impact during its peak. As one of the early protocols to popularize leveraged yield farming on BNB Chain, it attracted substantial total value locked (TVL) and a loyal user base. The shutdown reflects the harsh realities facing many DeFi projects in a rapidly evolving space where innovation, liquidity, and adaptability are essential for survival.
As the DeFi landscape continues to mature, Alpaca’s closure stands as a cautionary tale of how market shifts, token accessibility, and unsustainable revenue models can challenge even once-successful platforms.
Disclaimer: This article is for informational purposes only and does not constitute financial or investment advice.
