- Yield Protocol, a decentralized finance platform, has announced its decision to shut down operations by year’s end.
- The decentralized finance project described the US crypto environment as “challenging”.
Yield Protocol, Crypto Winter’s Latest Victim
The decentralized finance project, Yield Protocol, has announced its decision to wind down operations due to regulatory challenges and low demand for fixed-rate borrowing on the platform.
Yield Protocol is a fixed-rate-focused DeFi platform that offers users fixed-term borrowing and lending with an interest rate and access to exclusive trading tools.
The DeFi project’s December 2023 fixed-rate borrowing series will end on December 29th, marking the end of all borrowing and lending services on the platform.
The protocol once boasted a $22 million total locked value (TVL) in April 2022 before crypto winter and was backed by prominent venture funding companies.
In a post published on X, formerly Twitter, the project’s team assured users they will remain active until the December series is completed.
“We’re committed to supporting users till the end of the December series. After that, we’ll have limited support for withdrawals. Keep an eye on updates from our @yield Twitter account. For queries and support, our Discord channel remains open. Your questions are always welcome!”
Yield Protocol Cites Regulatory Pressure as Reason for Winding Down
“While we think that the future is bright for DeFi and fixed rate markets in DeFi, we felt this decision was necessary because there is currently not sustainable demand for fixed-rate borrowing on Yield Protocol,” the blog post reads.
The crypto market has entered a depressive state after the Terra Luna crash and FTX collapse in 2022. There has been an overstretched plunge in crypto token prices and on-chain activity across decentralized finance, gaming, and NFTs.
“Additionally, the current regulatory environment in the US, combined with increasing regulatory requirements in Europe and the UK, make it challenging for us to continue to support the Yield Protocol.”
The regulatory crackdown on the crypto industry by the Securities and Exchange Commission in the United States has enforced pressure on crypto platforms this year. With lawsuits instituted against established crypto businesses, strict regulatory measures, and the lack of regulatory clarity, several crypto projects are winding down operations rapidly.
The U.S. lawmakers are still in debate over central bank digital currencies (CDBCs) while the United Kingdom’s financial regulators are slowly adopting the stringent approach to crypto regulation the U.S. has.
There has been an upheaval in the UK over the newly launched crypto marketing rules. Crypto businesses like Bybit, a crypto exchange, have paused their services, citing compliance concerns with the rules.
Yield Protocol is the latest victim of regulatory pressure and the unfavorable state of the crypto market.
2023 has recorded a high number of crypto platforms going out of business.
In July, Algorand-based ending platform, Algofi, announced its decision to shut down its business, Geisha Finance, a lending platform that once had $29 million in total locked lending value, also shut down after a Multichain hack. Bittrex US, a crypto exchange, also wind down its services in the United States in March, citing regulatory concerns.