Algofi, a borrowing and lending protocol built on the Algorand blockchain, has announced its decision to shut down by the end of the year. The developers cited the evolving circumstances that have made it impractical to continue building and maintaining the Algofi platform to the highest standards.
While the developers expressed their confidence in Algorand’s technology and consensus algorithm, they acknowledged that a confluence of events has made sustaining Algofi unfeasible for their company. As a result, the platform will enter withdrawal-only mode shortly, and the process of sunsetting the platform will commence.
Starting from September 1, collateral factors for various markets on both Algofi V1 and V2, including ALGO, vALGO, STBL, USD Coin (USDC), goBTC, and goETH, will gradually reduce from approximately 80% to 0% by the beginning of December. Furthermore, the current Liquidity Mining programs will be halted with no future proposals accepted.
At the time of the announcement, the Algofi protocol had $25 million in total value locked, significantly lower than its peak of $135 million in February. This decline could potentially be attributed to external factors, such as the U.S. Securities and Exchange Commission (SEC) charging cryptocurrency exchange Bittrex with operating an unregistered exchange in the U.S. Algorand was among the six tokens classified as securities by the SEC, as its initial coin offering in 2019 displayed security-like characteristics.
Additionally, on June 13, eToro ceased trading of ALGO, MANA, MATIC, and DASH for U.S. customers due to the rapidly evolving regulatory landscape. Currently, the SEC considers 68 cryptocurrencies as securities, reflecting the increased scrutiny and regulatory challenges faced by the industry.