Alpaca Finance, one of the early pioneers of leveraged yield farming on the BNB Chain, has officially announced its closure after four years of operation on May 26. The decision of Alpaca Finance shutdown comes after a prolonged struggle to maintain the project amidst a challenging market environment, compounded by the delisting of its native token, ALPACA, by Binance in April 2025.
Despite the team’s efforts to adapt and innovate, declining yields, reduced user engagement, and financial pressures have led to this difficult conclusion.
A Roadmap for an Orderly Shutdown
To ensure a safe and structured shutdown, Alpaca Finance has outlined a detailed roadmap for closing its various product segments:
- AF1.0 (Initial Yield Farming Protocol)
- June 2025: New positions will no longer be allowed starting from the beginning of the month. All active positions will be automatically closed by June 30, 2025.
- Automated Vaults (AV)
- Immediate cessation of all farming strategies. Assets in vaults will be converted into their native token forms (e.g., BNB Vault → BNB).
- Alperp (Derivatives Platform)
- Transition to position-only closing mode. All remaining positions will be automatically closed by June 30, 2025.
- AF2.0 (Money Market)
- No new loans will be accepted. Users are encouraged to close their positions themselves; any unclosed positions will be liquidated by July 30, 2025.
- Buyback & Burn Mechanism
- The buyback and burn mechanism will cease. Remaining revenue will be distributed among stakers in the Governance Vault.
- Front-End Interface
- The platform’s front-end will remain active until December 31, 2025, allowing users sufficient time to withdraw their assets.
“We are proud to have been one of the major protocols on BNB Chain, helping to define the concept of leveraged yield farming in DeFi. Although the journey ends here, we hope that Alpaca’s ideas and experiences will continue to inspire the next generation of DeFi projects.” – The Alpaca Finance Team
From Rise to Decline: The Alpaca Story
Launched in early 2021, Alpaca Finance quickly became a cornerstone of the BNB Chain ecosystem, offering innovative leveraged yield farming solutions that resonated with users at the time. Its model was instrumental in driving significant Total Value Locked (TVL) and profitability for participants.
However, the turning point came with the rise of Uniswap V3 and other decentralized exchanges that introduced centralized liquidity mechanisms. These platforms allowed users to provide liquidity at specific price ranges while integrating leverage without the complex borrowing and collateral requirements inherent to Alpaca’s model. This superior flexibility and efficiency rendered Alpaca’s traditional approach less appealing.
Over the past two years, the broader DeFi market faced stagnation, with yields shrinking and capital flowing out of ecosystems. This decline severely impacted Alpaca’s performance, leading to a continuous drop in TVL and diminishing returns on yield farming strategies.
Despite multiple rounds of cost-cutting measures, including staff reductions and operational streamlining, the team struggled to sustain the project. Efforts to explore mergers and acquisitions with other projects also fell through as the market plummeted in early 2025.
The final blow came when Binance delisted the ALPACA token in April 2025, causing a sharp decline in its value despite a brief rally immediately following the announcement. At the time of writing, the token is trading around $0.09, reflecting the project’s struggles.
Lessons from Alpaca’s Journey
While the closure of Alpaca Finance marks the end of an era, its contributions to the DeFi space remain unforgettable. The project plays a pivotal role in defining leveraged yield farming and continues to inspire countless innovations within the industry.
However, its decline highlights the challenges faced by DeFi protocols in adapting to rapidly evolving market conditions and technological advancements. The rise of more efficient alternatives like Uniswap V3 underscores the importance of staying ahead of innovation and addressing user needs effectively.
Final Thoughts
The shutdown of Alpaca Finance serves as a poignant reminder of the volatile nature of the crypto market and the relentless pace of innovation within the DeFi space. While the project’s journey has come to an end, its legacy lives on in the ideas and lessons it leaves behind.
For now, users are recommend to follow the outlined shutdown roadmap and withdraw their assets before the deadlines. As the DeFi landscape continues to evolve, the story of Alpaca Finance will undoubtedly serve as both a cautionary tale and a source of inspiration for future projects.
