Algorand's largest DeFi protocol, Algofi, will shut down operations

2023-07-12 02:41:37

Algorand’s ALGO token has been falling in price since the SEC classified it as a security.

Algorand’s ( ALGO ) largest decentralized finance protocol, Algofi, will cease operations as current events make it impossible to continue, according to a July 10 statement.

“A series of events has occurred that has made building and maintaining the Algofi platform to the highest standards no longer a viable path for our company.”

The Algofi team stated that the protocol will be set to a “withdrawal-only mode” and all social media accounts except the Discord channel will be closed “to ensure seamless and unified communication.”

The closing process is expected to take several months, during which time the team will reduce the collateralization factor of the digital asset market on its platform, allowing liquidity to migrate to other protocols.

Meanwhile, the Algofi team reiterated their belief that Algorand’s blockchain technology and its novel consensus algorithm are still going strong.

Algofi is an Algorand-based lending protocol that allows users to earn interest, borrow money, and redeem ALGO tokens. Since the start of the year, the protocol has outperformed rival DeFi platforms, with the total value of assets locked in the protocol peaking in February at more than $120 million. However, that number has dropped to $33.03 million as of this writing, according to Dellama.

Source: DeFillama

Algorand’s DeFi TVL is dropping

Following Algofi’s announcement, the total value of assets locked in Algorand fell more than 3% to $59.84 million, the second-largest drop in assets over the past 24 hours, according to Dellama.

Source: DeFillama

The drop, meanwhile, continues a downward trend that began in April when the U.S. Securities and Exchange Commission (SEC) classified digital assets as securities.

Although the Algorand Foundation disputed the SEC’s classification, the price of the ALGO token has remained low, eventually falling to $0.11107, its highest level since 2020.

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