Alpaca Finance, a once prominent player in the BNB Chain ecosystem and a pioneer in leveraged yield farming, has announced the decision to sunset operations after a four-year run. This news marks the end of a resilient fair launch project in the DeFi space, as the team cited sustained financial strain, evolving market dynamics, and a final blow from Binance as reasons for the closure.
In a blog post published on Monday, the Alpaca team described the decision as “incredibly difficult” but necessary to ensure a secure wind-down process and safeguard their community. Following the announcement, the ALPACA token experienced a sharp 30% decline in value, trading at around $0.112.
The closure of Alpaca Finance reflects the significant shifts in the DeFi landscape since its inception in early 2021. While the project initially gained traction with its leveraged yield farming product, the market evolved, and traditional yield farming models faced challenges amidst growing competition and changing demand dynamics.
In response to these challenges, Alpaca introduced new products such as Automated Vaults, the AUSD stablecoin, and the decentralized perpetual exchange Alperp. However, profitability remained elusive in the face of muted market conditions. The team also explored merger and acquisition opportunities, but these efforts did not materialize, particularly amid market downturns in early 2025.
The financial model of Alpaca, which relied on revenue rather than venture capital, left the protocol increasingly vulnerable. Despite attempts to downsize, the team continued to operate at a loss for over two years, leading to the difficult decision to wind down operations.
A critical blow came when Binance, the largest exchange by volume, delisted the ALPACA token, limiting access and hampering the deployment of remaining resources. Combined with declining total value locked and diminishing yields, the closure became inevitable.
As part of the wind-down process, Alpaca outlined a timeline for shutting down its products, with the original leveraged yield farming platform and Alperp scheduled to be fully decommissioned by late June or July 2025. The front-end interface will remain active until the end of the year to facilitate fund withdrawals, while buybacks and burns will cease, and remaining protocol revenue will be distributed to governance stakers.
In closing, the founders of Alpaca expressed gratitude to the community for their support and acknowledged the challenges faced by DeFi protocols in a competitive and maturing market. The closure of Alpaca Finance underscores the obstacles encountered by projects without VC backing or access to fresh capital in the rapidly evolving DeFi space.