Drop in Alpaca Finance (ALPACA) Value: Reason Behind the Price Decrease
Leading DeFi Project Alpaca Finance to Shut Down After Four Years on BNB Chain
After four years of operation, Alpaca Finance, a prominent player in the decentralized finance (DeFi) sector on the BNB Chain, has announced its intention to shut down by the end of December. The decision comes due to dwindling revenues, failed acquisitions, and the delisting of the ALPACA token by Binance.
The platform will cease all services, including liquid farming, stable cryptocurrencies, and perpetual trading services by the end of this year. Alpaca Finance gained recognition for its liquid farming activities on the BNB Chain but faced challenges when the liquidity of Automated Market Makers (AMMs) fluctuated, reducing the appeal and profitability of conventional liquid farming.
Considering the current financial situation, the team explained that they had been operating at a loss for more than two years and could not maintain sustainability. Matters were not helped by failed mergers and acquisitions in 2025, as the market weakened early that year.
Following a blog post published on Monday, the team stated, "We believe that the most responsible step to protect our community is to shut down the project in a secure manner." The ALPACA token fell nearly 30% in response, dropping to $0.1126.
Binance's decision to delist the ALPACA token marked the final blow. The team noted that token delisting restricted accessibility and limited their ability to allocate funds to new projects. The shutdown process will be phased, with the main steps to be completed between June and December.
Enrichment Data (for context): Alpaca Finance, launched in 2021, reached over $1 billion in total value locked (TVL) at its peak. However, its revenue relied heavily on user activity, which declined over time. The project's fair launch model meant it lacked venture capital support, and it could not leverage pre-mined tokens for added financial cushioning. Additionally, Alpaca Finance's TVL dropped sharply from $900 million in early 2022 to $54.6 million, impacting operational revenues and liquidity.
As Alpaca Finance bids farewell, users will have access to the platform's front-end until December 31, 2025, allowing ample time to withdraw funds and redeem assets safely. The decision to wind down comes as a result of financial losses, an unsustainable business model in a more capital-intensive and competitive DeFi landscape, and external pressures, such as token delisting and declining user engagement.
The shutdown of Alpaca Finance, a four-year old DeFi project prominent on the BNB Chain, marks the end of their block chain-based finance and investing services, including liquid farming, stable cryptocurrencies, and perpetual trading services. Despite gaining recognition for its liquid farming activities on the BNB Chain, the team's decision to close the project is due to a combination of factors, including multi-year financial losses, failed mergers and acquisitions, and Binance's delisting of the ALPACA token, which limited their ability to allocate funds to new projects and restricted accessibility.
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