Algorand’s largest decentralized finance protocol, Algofi, recently announced its decision to wind down operations due to current events rendering its continued viability questionable. In a statement released on July 10, the Algofi team explained that a combination of factors has made it impractical to maintain the platform to the highest standards.
As part of the winding down process, Algofi will transition to a “withdrawal-only mode” and will deactivate all its social media accounts, with the exception of its Discord channel, to ensure effective and unified communication.
The team anticipates that the winding down process will take several months. During this period, they plan to decrease the collateral factors of the digital asset markets on the platform, allowing liquidity to migrate to alternative protocols. Nonetheless, the Algofi team remains firm in their conviction that Algorand’s blockchain technology and unique consensus algorithm retain their strength and potential.
Algofi is a lending protocol built on the Algorand blockchain, enabling users to earn interest, borrow funds, and engage in token swapping using ALGO tokens. Despite experiencing significant growth earlier in the year, with the total value of locked assets surpassing $120 million in February, the protocol’s popularity has waned. Presently, the total value of assets locked on Algofi stands at $33.03 million, as reported by DeFillama data.
Following the announcement from Algofi, the total value of assets locked on Algorand has decreased by over 3%, reaching $59.84 million. This decline contributes to a larger downward trend that began in April when the U.S. Securities and Exchange Commission (SEC) categorized the ALGO token as a security. While the Algorand Foundation disputes the SEC’s classification, the ALGO token’s value has been affected, and it currently sits at $0.11107, a level last observed in 2020.