Algorand’s largest DeFi protocol, Algofi, has announced it will be shutting down in the coming months. According to a blog post by Algofi, the decision to decommission its platform is due to a “confluence of events,” which has made it impossible to maintain its highest standards of service.
Algofi To Enter Withdrawal Mode
Launched in December 2021, Algofi is popularly known as the DeFi hub on the Algorand blockchain. It is designed as a combined decentralized exchange and lending protocol allowing users to earn interest, borrow, and swap various crypto assets.
Following its announcement to shut down, Algofi has stated the platform will shortly enter withdrawal mode by first deactivating all social media accounts except its discord channel, which will be used for further dissemination of updates regarding the wind-down process.
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Furthermore, all current liquidity programs will be suspended along with the execution of any governance proposal. In addition, Algofi will look to reduce the collateral factors for its lending programs over the next few months.
The Algofi protocol accounts for 54% of Algorand’s Total Value Locked (TVL) according to data by DeFilLama. After the release of its recent blog post, the DeFi protocol has seen its TVL drop by 12%, falling from $36.93 million to $32.22 million.
Despite announcing plans to exit Algorand, Algofi maintains its support for the layer-1 blockchain. “To this day, our belief in the strength of Algorand’s technology and novel consensus algorithm has not wavered,” read a statement from Algofi’s blog post earlier today.
Algorand (ALGO) Recent Struggles
Algorand has had a rather mixed 2023, with the ALGO token taking off at the beginning of the year to hit its current peak price of 2023 – $0.29. However, this was followed by a bearish trend, bringing the token’s price as low as $0.19.
After consolidating for some days, ALGO’s value plummeted further after the United States Securities and Exchange Commission (SEC) classified the cryptocurrency as a security in its lawsuit against cryptocurrency exchange Bittrex.
Although the Algorand Foundation did kick back at the SEC, stating that ALGO is not a security under US law, it did not prevent the devastating fall in the token’s market price.
Between April 17 and now, ALGO has been on a downtrend, losing over 52% of its market value while reaching its lowest market price at $0.098, according to data from CoinMarketCap.
The troubles of the Algorand platform are also well reflected in its DeFi ecosystem based on data from DeFilLama. After attaining a value of $206.8 million in February, Algorand TVL now stands at $58.77 million, representing a 71.5% decline over the last five months.
At the time of writing, ALGO is exchanging hands at $0.11, having lost 0.65% in value over the last hour.
