Alpaca Finance was a lending protocol on BNB Chain and Fantom. Lenders deposited single assets to earn yield. Borrowers took undercollateralised loans to open leveraged yield farming positions. It is no longer operating. On 26 May 2025 the team announced it would wind down all of its products. It disabled new farm positions in the first week of June 2025, closed the remaining positions automatically by 30 June 2025, and kept the front end open for withdrawals until 31 December 2025. ALPACA still trades, at about $0.00065 on 25 October 2026 according to CoinMarketCap. That is more than 99.99% below its 2021 peak.
Where things stand now (25 October 2026)
- Protocol status: shut down. DefiLlama still tracks Alpaca Finance but marks its website URL as dead.
- Token: CoinMarketCap shows ALPACA at about $0.00065 and a market cap of about $98,600, with no reported 24-hour volume, on 25 October 2026. It lists an all-time low of $0.0002037 on 20 October 2026.
- Supply: CoinMarketCap lists a maximum supply of 188 million ALPACA and about 151.66 million in circulation.
- Peak: CoinMarketCap gives an all-time high of $8.60 on 6 March 2021. CoinDesk reported that the protocol held more than $1 billion in total value locked (TVL) at its peak.
The shutdown, dated
| Date | Event | Source |
|---|---|---|
| Late April 2025 | A major centralised exchange delisted ALPACA. Short liquidations then drove a brief rally of about 550%, with $55 million in positions force-closed in one day. | CoinDesk, 27 May 2025 |
| 26 May 2025 | The team announced on X that it would begin "sunsetting Alpaca Finance and all of its products". | The Block, 26 May 2025; CoinDesk |
| First week of June 2025 | Opening new positions disabled on all farms. | The Block |
| 30 June 2025 | All remaining active farm positions closed automatically. | The Block |
| 31 December 2025 | Last day of front-end access for withdrawals. Operations to end by the end of 2025. | CoinDesk |
Why the team said it closed
CoinDesk and The Block report these reasons from the team's statement:
- Revenue tied to usage. The protocol earned only from activity on it, and the team said it had operated at a loss for more than two years.
- A harder market. The team described DeFi as more competitive and saturated, and as favouring large, well-capitalised players.
- Failed merger talks. The team said it held M&A discussions with several projects and "some progressed meaningfully". The deals fell apart when the market declined again in early 2025.
- The delisting. The team said it sharply cut liquidity and access to the token, which limited how it could use its remaining funds.
The team called the shutdown "the most responsible course of action to safeguard our community." CoinDesk reported ALPACA at about $0.08 at the time of the announcement.
How Alpaca Finance worked
Lending
Users deposited a single asset into a lending pool and earned interest from borrowers. The borrowers were mainly leveraged farmers. Lenders' yield therefore depended on how much leverage farmers wanted.
Leveraged yield farming
A farmer supplied some capital, and the protocol lent extra assets from the lending pools so the farmer could open a larger liquidity-provider position on a decentralised exchange. DefiLlama describes these as "undercollateralized loans for leveraged yield farming". The loan stayed inside the farming position and never went to the borrower's wallet.
Liquidation risk is measured with a debt ratio: borrowed value divided by position value. Each farm had its own liquidation parameter, called a kill factor in the contracts. When a price move pushed the debt ratio past that level, the position could be liquidated to protect lenders.
An illustration, using arithmetic only rather than Alpaca's actual pool settings:
- A farmer puts in 10 units and borrows 20, opening a 30-unit position at 3x. The debt ratio is 20 / 30 = 66.7%.
- If that farm's threshold were 80%, liquidation would start when the position fell to 25 units (20 / 0.8). That is a fall of about 16.7% in position value.
- At 2x (10 in, 10 borrowed), the debt ratio starts at 50%. The position could fall to 12.5 units, about 37.5%, before reaching the same threshold.
Higher leverage leaves a much smaller buffer. A liquidity position can also lose value when its two assets move apart in price (impermanent loss), and leverage makes that loss larger too.
Automated vaults
In a May 2022 interview on the BNB Chain blog, the team described vaults that ran leveraged strategies for users:
- Market-neutral vaults opened long and short positions at the same time and rebalanced them to keep exposure neutral. A BlockSec audit of the Delta Neutral Vault describes the same design: the two positions are meant to offset price moves.
- Savings vaults were announced as upcoming. They aimed at roughly 1x long exposure to a single asset such as BNB, ETH or BTC.
The yield ranges quoted in that interview (20–100% for market-neutral vaults, a 10–25% target for savings vaults) were the project's own claims, not independent results.
Perpetual futures
The protocol also ran a decentralised perpetual futures product, which CoinDesk lists among the products being wound down.
How far can a leveraged farm fall?
Enter your own capital, the amount borrowed and a farm's liquidation threshold to see how much the position can lose before it reaches that threshold.
| Your own capital put into the position | Amount borrowed from the lending pool | The farm's liquidation threshold (debt ratio) | Fall in position value before liquidation |
|---|---|---|---|
| 10 units | 20 units | 80 % | 16.7 % |
| 10 units | 20 units | 80 % | 16.7 % |
| 10 units | 10 units | 80 % | 37.5 % |
- All three values are illustrative inputs, not Alpaca's actual pool settings.
- A negative result means the starting debt ratio is already above the threshold you entered.
This is debt-ratio arithmetic on your inputs only. It leaves out impermanent loss, interest and fees, and Alpaca has shut down, so no live farm uses these settings.
The ALPACA token
CoinMarketCap describes ALPACA as a "fair-launch project with no pre-sale, no investor, and no pre-mine". CoinDesk also says the protocol had no VC backing. Tokens were earned by using the protocol, and holders could stake them in a governance vault. The fair launch spared it from unlocks by early investors. It also meant there was no outside capital to fall back on once fee revenue declined, which is the problem the team gave for closing.
Security record
In the May 2022 BNB Chain interview, the team said it had completed 20 security audits, did not allow flash loans, and ran an "Alpaca Insurance Plan". These are the team's own statements.
What the case shows about leveraged DeFi
- Leverage cuts both ways. The debt-ratio arithmetic that multiplies farming returns also shrinks the room before liquidation. On Alpaca, each pool had its own threshold, and that threshold set the risk more than the headline leverage did.
- Usage-only revenue is fragile. When TVL and borrowing demand fell, both lender yields and protocol fees fell with them.
- Token access matters to a protocol. The team said losing a major listing restricted both users and its own treasury plans.
- An orderly wind-down is possible. The team announced dates in advance: new positions disabled, positions auto-closed, and a final withdrawal date.
