- The largest DeFi Protocol in Algorand, Algofi, winds down operations.
- Algofi is now in withdrawal mode, while other features have been halted.
- Algorand may be another subject of legal scrutiny.
Algofi winds down Operations
Algofi, the largest Defi protocol in Algorand, just announced its plan to close down operations. Algofi shared the news in a blog post, reminiscing the team’s original plan for Algofi and, eventually, the decision to wind down operations.
“a confluence of events has taken place that no longer makes building and maintaining the Algofi platform to the highest standards a viable path for our company. Due to this, we will begin sunsetting the platform and put the platform in withdrawal-only mode shortly.”
While the blog post announced the closedown of the largest decentralized finance protocol in Algorand, no details specified what the “events” are.
After the announcement, activities like the liquid mining program on the DeFi platform have been halted alongside future proposals regarding the program.
In addition to the changes, Algofi is currently in withdrawal mode only. This implies that users are limited to a single action on the DeFi platform, withdrawal. Swapping, bridging and other DeFi features are not accessible anymore.
The Algofi team shares its decision to shut down all its social media accounts except Discord to maintain unified communication.
Algofi: Algorand’s Largest DeFi Protocol
Algofi is a decentralized exchange and lending protocol built on Algorand, the open-source permissionless protocol.
Algorand is well-known in the crypto industry for its developer-centric features. It has spearheaded the creation of impressive products which are developer friendly. Recently, the Algorand ecosystem released a protocol update that solved a handful of developers’ problems. The permissionless protocol is home to blockchain developers interested in a seamless developer experience.
Like other developers interested in building on a secure and affordable platform with low-cost transaction fees, Algofi built their lending protocol on Algorand.
In the words of the Co-founder of Algofi, John Clarke, Algorand was the best option to build on, “Because Algofi is built on Algorand, we can offer transactions that cost less than $0.01, compared to $15 or more on other networks. In the long term, we can trust our protocol will scale with the growing number of transactions as the retail and institutional communities embrace DeFi.”
In 2021, Algofi raised $2.8 million in a funding round with plans to build the first crypto-native bank powered by decentralized finance.
Unfortunately, its plan to play a significant role in the growth of DeFi globally in the next decade has been halted.
The demise of the once flourishing DeFi protocol on Algorand is speculated to be the consequence of the recent legal scrutiny of Algorand.
In the lawsuit between the United States Securities Exchange Commission and Coinbase, ALGO, the official cryptocurrency of the Algorand ecosystem, was categorized as a security.
Additionally, the Algorand ecosystem’s native token, ALGO, has declined tremendously. The Total Locked Value (TVL) on Algorand used to be $200 million as of February, but Defilama data shows that the current TVL of the permissionless protocol is at $59 million.
It may be inferred that the incidents above contributed to the current state of the Algorand ecosystem.
