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.


Don’t miss the next big story – join our free daily newsletter.

Tags

Upcoming Events

Hilton Metropole | 225 Edgware Rd, London

Mon - Wed, March 18 - 20, 2024

Crypto’s premier institutional conference returns to London in March 2024. The DAS: London Experience: Attend expert-led panel discussions and fireside chats Hear the latest developments regarding the crypto and digital asset regulatory environment directly from policymakers and experts.

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

Research report - cover graphics (1).jpg

Research

In this report, we dive into crypto private market data to gather insights on where the future of the industry is headed. Despite a notable downturn in private raises, capital continues to infuse promising projects that aim to transform payments, banking, consumer experiences, community, and more, with 2023 being the fourth-largest year for crypto venture capital.

article-image

The stock price jump comes after Coinbase reported ending its seven-quarter run of net losses during the fourth quarter

article-image

BUZZ holds shares of Coinbase, Robinhood and MicroStrategy

article-image

Opinion: Even though I didn’t pay for my “Diamond Hands” burger with BTC, don’t let that fool you into thinking that crypto’s development is futile

article-image

The results mark “a major positive inflection point,” one analyst says, as the exchange carries net income momentum into a crypto rally

article-image

While the slate of 10 US spot bitcoin funds have tallied $4.6 billion of net inflows thus far, half of the field is lagging the leaders

article-image

Trading volumes totalled $154 billion in Q4, including $125 billion in institutional volume