Alpaca Finance to Sunset Operations After Volatile Binance Delisting

Alpaca Finance, a prominent decentralized finance (DeFi) protocol offering leveraged yield farming on BNB Chain and Fantom, has announced plans to gradually wind down all its products and services. The decision, revealed on May 26, 2025, comes in the wake of Binance’s delisting of the ALPACA token on May 2, 2025, which triggered significant price volatility and posed challenges to the project’s sustainability. This move marks a significant turning point for one of DeFi’s early players, highlighting the broader difficulties faced by projects in the volatile crypto market.

Alpaca Finance’s Shutdown Plan

In an official statement shared via X, Alpaca Finance explained that the decision to sunset operations was made after “extensive internal deliberation and a thorough evaluation of possible paths forward.” The protocol emphasized that the move aims to protect its community and ensure an orderly exit from operations. Specifically, Alpaca Finance will halt new position openings in its liquidity pools by the first week of June 2025 and automatically close all remaining active positions by June 30, 2025.

The announcement follows a turbulent period for Alpaca Finance, exacerbated by Binance’s decision to delist the ALPACA token. The exchange, which cited factors such as low liquidity and project progress in its delisting criteria, removed ALPACA trading pairs, effective May 2, 2025.

Price Volatility Following Binance Delisting

Binance’s delisting announcement on April 24, 2025, sent shockwaves through the ALPACA market, leading to an extraordinary price surge followed by a sharp correction. Typically, delistings lead to price declines due to reduced liquidity. However, after Binance flagged ALPACA for removal, traders betting on a price drop opened significant short positions. In response, whales and market makers initiated large long positions, simultaneously driving up spot market prices. According to Coinglass, short liquidations for ALPACA reached $13.32 million on April 25 and $13.12 million on April 26, 2025. This fueled a dramatic price surge, with ALPACA skyrocketing from $0.0334 to a peak of $1.06 between April 24 and April 30, 2025—a staggering 3,073% increase

The rally was short-lived. After hitting $1.06 on April 30, ALPACA plummeted 77.35% to approximately $0.24 by May 2, 2025, according to Coingecko. As of May 27, 2025, the token trades at $0.1108, reflecting a 30.4% drop in the past 24 hours.

Alpaca Finance’s Rise and Fall

Launched in 2021, Alpaca Finance emerged as a leading DeFi protocol on BNB Chain, enabling users to amplify returns through leveraged yield farming. Capitalizing on the 2021 DeFi boom, it became a cornerstone of BNB Chain’s ecosystem and expanded to Fantom, serving a dedicated user base. At its peak, Alpaca managed over $865 million in total value locked (TVL), but by May 2025, this figure had dwindled to $53 million, according to DefiLlama.

The protocol faced challenges as the DeFi landscape evolved. The rise of concentrated liquidity automated market makers (AMMs) diminished the appeal of traditional leveraged yield farming, making profitability harder to achieve. Alpaca attempted to innovate with automated vaults (AVs), a stablecoin (AUSD), and a decentralized perpetuals exchange (Alperp), but these initiatives failed to gain traction. As a fair-launch project without pre-mining or venture capital backing, Alpaca relied solely on protocol revenue, which declined sharply alongside its TVL. “The team has been operating at a loss for over two years, even after significant downsizing,” Alpaca stated. “Continuing under these conditions is simply not sustainable.”

The Binance delisting was described by Alpaca Finance as “another major blow” that hindered its ability to pursue new initiatives. Delistings from major exchanges like Binance often reduce a token’s liquidity and visibility, making it challenging for projects to maintain user confidence and attract new capital.

Broader DeFi Challenges

Industry observers note that Alpaca Finance’s closure reflects broader pressures in the DeFi sector, where projects must contend with regulatory scrutiny, market volatility, and the need for sustainable business models. “The DeFi landscape has evolved dramatically,” Alpaca noted in its statement. “It’s more competitive, more saturated, and often favors large, capitalized players with new token supplies to give away.”

Alpaca’s closure may prompt other protocols to reassess their strategies, particularly those operating on smaller chains like BNB Chain and Fantom.