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

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:

  • Blockworks Daily: The newsletter that helps thousands of investors understand crypto and the markets, by Byron Gilliam.
  • Empire: Start your morning with the top news and analysis to inform your day in crypto.
  • Forward Guidance: Reporting and analysis on the growing intersection of crypto and macroeconomics, policy and finance.
  • 0xResearch: Alpha directly in your inbox. Market highlights, data, degen trade ideas, governance updates, token performance and more.
  • Lightspeed: Built for Solana investors, developers and community members. The latest from one of crypto’s hottest networks.
  • The Drop: For crypto collectors and traders, covering apps, games, memes and more.
  • Supply Shock: Tracking Bitcoin’s rise from internet plaything worth less than a penny to global phenomenon disrupting money as we know it.
Tags

Upcoming Events

Industry City | Brooklyn, NY

TUES - THURS, JUNE 24 - 26, 2025

Permissionless IV serves as the definitive gathering for crypto’s technical founders, developers, and builders to come together and create the future.If you’re ready to shape the future of crypto, Permissionless IV is where it happens.

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

Research Report Templates.jpg

Research

Bluefin possibly stands at an inflection point. The token is near an all-time low yet the protocol’s spot volume market share and derivatives exchange usage have been increasing month over month since its November launch. Given its current market position and the upcoming upgrades (for both Bluefin and SUI), there may be upside potential before the increased supply growth in December. However, strong opposition from existing competitors (like Cetus and Suilend), as well as new entrants (like Aftermath), pose key challenges to Bluefin’s medium-term success.

article-image

Top Committee Democrat Sen. Elizabeth Warren in her opening statement accused Atkins of “helping billionaire CEOs like Sam Bankman-Fried”

article-image

Introducing garbled circuits for enhanced privacy and regulatory compliance

article-image

Ross Ulbricht was a freedom maximalist building freedom tech, powered by Bitcoin

article-image

Solana validators can reap benefits including payments, votes and community clout

article-image

Sponsored

WalletConnect is cementing itself as the essential connectivity layer, ensuring wallets remain the entry point for billions of users

article-image

According to a legal filing, Galaxy Digital helped boost the price of LUNA while quietly selling its tokens