Alpaca Finance, Once a DeFi Giant on BNB Chain, Will Shut Down

Another early DeFi giant has reached the end of the road. Alpaca Finance, once a star on the BNB Chain, has announced it will shut down operations by the end of 2025. The platform, known for pioneering leveraged yield farming, cited financial strain, competitive pressures, and a final blow from Binance as the key reasons for its closure.

The team behind Alpaca shared the news in a heartfelt announcement. “This choice wasn’t made lightly,” they wrote. “But we believe it is the most responsible course of action to safeguard our community and ensure a graceful and secure wind-down.”

For long-time users and supporters, the news comes as a disappointment. Alpaca has had a strong run since launching in 2021. During the height of the DeFi boom, it experienced a surge in popularity, boasting over $1 billion in total value locked (TVL). It became a go-to protocol on the BNB Chain for users looking to amplify their yield farming strategies through leverage. But the good times didn’t last forever.

What Went Wrong?

Alpaca’s business model relied heavily on active user participation. Revenue was directly tied to how much users borrowed and used the protocol. As DeFi markets cooled and users moved elsewhere, Alpaca’s income shrank.

For over two years, the team said, the protocol had been operating at a loss. There was no VC funding to fall back on. Alpaca had launched with a “fair launch” structure. This meant no private sales, no pre-mined tokens, and no early investors. While this won the trust of the DeFi community early on, it also left the team with fewer options when challenges arose.

The final blow came in April 2025 when Binance delisted the ALPACA token. That single event sent shockwaves through the community. It caused a sudden spike in the token's price, a 550% rally. But this was driven by liquidations and didn’t reflect any real growth. $55 million in positions were force-closed in just one day. Once the dust had settled, it became clear that the delisting had severely damaged ALPACA’s liquidity and accessibility.

With the token’s future in doubt, it became nearly impossible to launch new initiatives or attract new partners.

Mergers That Never Happened

Behind the scenes, the Alpaca team tried to save the project. They explored multiple merger and acquisition (M&A) opportunities. Some talks progressed, according to the team. But as market sentiment soured again in early 2025, those deals fell through.

There just wasn’t enough momentum or capital left to keep the project alive. By the time of the shutdown announcement, ALPACA was trading at around $0.08. That’s over 90% down from its all-time high during the 2021 bull run.

The Shutdown Plan

Although Alpaca is closing, users won’t be left in the dark. The protocol has outlined a careful wind-down process. All products will be shut down over the coming months, including:

• Leveraged yield farming
   
• Automated vaults
   
• Decentralised perpetuals

The front-end interface will stay live until December 31, 2025. This will give users ample time to withdraw their assets. The team said their focus now is to ensure users can exit safely. For those still holding assets in the protocol, it's important to act before the shutdown deadline.

Alpaca’s Rise and Fall

Alpaca wasn’t just another DeFi project. It was a leader in innovation on the BNB Chain. Leveraged yield farming was a game-changer. Users could borrow and farm LP tokens with increased capital, boosting their yields. It was risky, but the rewards were high, especially during the DeFi summer of 2021.

At its peak, Alpaca was handling massive daily volumes. TVL crossed $1 billion. The protocol was among the top projects not just on BNB Chain but across DeFi.

Its unique model, without private sales or VC influence, made it a darling of DeFi purists. It built a loyal community and delivered real utility, but the crypto space is brutal. Success today doesn’t guarantee relevance tomorrow.

DeFi matured quickly, competition increased, and more advanced platforms emerged with more sustainable business models and bigger financial backers. As attention shifted, Alpaca struggled to keep up.

Then came the bear market. Usage dropped, fees dried up, and revenue shrank. Binance delisting the token was the final hit, a death knell for a project already on life support.

A Lesson for the DeFi Ecosystem

The fall of Alpaca is a sobering reminder for the DeFi space. Even the most promising protocols can falter. Innovation alone isn’t enough. Long-term survival requires sustainable revenue, strong partnerships, and financial buffers.

It also shows the risks of depending too much on centralised platforms. Binance’s decision to delist ALPACA may have been based on liquidity or compliance concerns. But for Alpaca, it destroyed a major avenue for users to access and trade their native token.

The project’s commitment to decentralisation and fairness, with no early investors and no VCs, was admirable. But in a highly competitive and capital-intensive market, it also left them exposed. Without a safety net or war chest, Alpaca had little room to manoeuvre when things got tough.

What’s Next for Users?

If you're an Alpaca user, here’s what to do:

• Withdraw your assets as soon as possible.
   
• Monitor project announcements for final shutdown timelines.
   
• Double-check contract addresses before moving funds to avoid phishing attempts.
   
• Avoid scams claiming to "rescue" your ALPACA tokens or offer migration solutions.

Remember, front-end access remains available until the end of 2025. But don't wait until the last minute. Withdrawing early is the safest move.

Saying Goodbye

Alpaca Finance had a great run. It played a big role during one of DeFi’s most explosive phases. It brought innovation, fairness, and strong community values.

Its shutdown is a loss for the DeFi world. But it’s also a chance for the ecosystem to reflect and grow. Crypto moves fast. Not every project survives, but every rise and fall shapes the next wave of innovation.

Farewell, Alpaca. You helped define an and you’ll be remembered for it.