Closure of largest DeFi destination underscores Algorand’s struggles

The AlgoFi team didn’t specify the challenges that prompted its closure, but said a combination of factors rendered it unfeasible to continue operating

by Blockworks&Shalini Nagarajan /
article-image

WindAwake/Shutterstock, modified by Blockworks

share

AlgoFi, a blockchain-based crypto lending platform built on Algorand, announced its upcoming closure due to the platform’s unfeasibility. 

The protocol, which allowed users to purchase cryptocurrencies and earn interest, will soon transition into a withdrawal-only mode.

In a blog on Tuesday, the AlgoFi team explained that a combination of events led to the decision that maintaining and developing the platform is no longer a viable path for the company. 

Total value locked (TVL) for AlgoFi has cratered by -57% over the past 24 hours and is down -88% over a week span, data shows. Algorand’s total DeFi TVL, now stands at just under $40 million, down from a February 2023 peak of about $207 million.

AlgoFi emphasized their belief in Algorand’s technology and consensus algorithm remains steadfast.

Although AlgoFi did not explicitly attribute its closure to specific factors, the ALGO token has been targeted under recent US regulatory action.

In April, the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Bittrex for allegedly operating an unregistered exchange. Within the filing, the exchange identified six crypto tokens, including ALGO, as securities. 

The SEC stated in its complaint that ALGO was sold as an investment contract, from the time of its offering, making it a security.

Following this development, eToro, a brokerage firm, removed ALGO trading from its platform for US customers, citing a rapidly changing regulatory landscape.

As of July 12, Algorand’s market capitalization stands at $837 million, a decline from around $1.6 billion during the time of the Bittrex lawsuit, according to CoinGecko data.

Algorand Foundation, the entity behind the Algorand blockchain project, assured the community that the ecosystem remains intact and continues to innovate. 

It recommended users seeking alternatives to AlgoFi to explore decentralized exchanges such as Tinyman or Pact, as well as protocols like Folks Finance.


Get the news in your inbox. Explore Blockworks newsletters:

Tags

Decoding crypto and the markets. Daily, with Byron Gilliam.

Upcoming Events

Javits Center North | 445 11th Ave

Tues - Thurs, March 24 - 26, 2026

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Unlocked by Template.png

Research

The march toward an interoperable and onchain-by-default internet depends on reliable messaging and value transfer across heterogeneous domains. Crosschain protocols now process >$1.3T in combined annual transfer volume and secure tens of millions of user interactions, yet no single design dominates.

article-image

The exchange’s full approval from the UAE’s Securities and Commodities Authority marks a regulatory milestone for global crypto oversight

by Blockworks /
article-image

Founded by Coinbase and Cruise veterans, CipherOwl plans to bring artificial intelligence to blockchain monitoring and risk detection

by Blockworks /
article-image

As the shutdown enters its second week, sources say the Senate Banking Committee looks to move ahead with a market structure bill markup

article-image

The collaboration expands Ripple’s Middle East footprint, supporting Bahrain’s blockchain adoption and future rollout of Ripple USD

by Blockworks /
article-image

The medical device firm will manage its $400 million Solana holdings using Coinbase Prime infrastructure to bolster its digital asset strategy

by Blockworks /
article-image

The deal gives PayPay a 40% stake in Binance Japan, linking digital assets with Japan’s largest mobile payment network

by Blockworks /