Algorand’s DeFi protocol, AlgoFi, has announced that it will soon begin to shut down the platform and leave it only in withdrawal mode. The motivation is a “confluence of events,” including the collapse of the crypto ALGO.
Algorand: AlgoFi-based crypto project shuts down platform
AlgoFi, the DeFi protocol based on Algorand’s layer1 blockchain, has announced that it will soon shut down the platform, leaving it in withdrawal-only mode.
In a roundup of tweets and in its blog post, AlgoFi explains to its community the tough decision to shut down the platform precisely because, going forward, they will no longer be able to provide the support necessary to keep the protocol at its high standards.
The cause of this is “a confluence of events” that have occurred over the years, such as the sharp decline in activity on the Algorand blockchain. AlgoFi is the DeFi protocol that holds 55% of Algorand’s value.
Algorand and the performance of the crypto ALGO
Looking at the price chart of Algorand (ALGO), the crypto does not seem to be doing very well.
And indeed, compared to last year, ALGO has experienced a price dump of -64%, as it has gone from $0.29 to the current $0.11.
Comparing with major crypto assets by market capitalization such as Bitcoin (BTC) and Ethereum (ETH), ALGO is bucking the trend. Indeed, BTC and ETH have been bullish in price since July 2022, +47% and +62%, respectively.
When you then consider that the US Securities and Exchange Commission (or SEC) recently labeled the ALGO crypto as an unregistered security, the issue is no longer just one of price.
Such statements by the US regulator, may have affected the development and growth of DeFi projects on Algorand.
Hence, speaking of DeFi, it is also interesting to look at the total value locked (TVL) on Algorand, which currently stands at $59 million. Again, this is a sharp drop from over $200 million in February, according to data from DefiLlama.
The cyber attack on MyAlgo users
Last March, Algorand’s Layer 1 blockchain had suffered a cyber attack that affected users of MyAlgo, the third-party wallet created by Rand Labs.
Spreading the news was the foundation itself, which, while on the one hand urged users of the wallet to withdraw their crypto assets, it also claimed that the blockchain had not been compromised.
To track the transfers of the attacked wallets, Algorand had also involved Chainalysis, so that when found, it could arrange to freeze the funds of at least those deposited on exchanges using Chainalysis.
And indeed, Changenow, Kucoin, and Circle were able to cooperate, since they knew the addresses of the attackers’ wallets.