A DeFi protocol that once generated $22 million in Total Value Locked (TVL) and boasted some of the industry’s largest venture capital backers is shutting down operations.
The Yield Protocol shutdown, announced Tuesday, represents the latest casualty of a bear market that has seen several former high-flyers abandon their projects.
Yield Protocol’s X account announced that the protocol would be ‘winding down’. The protocol offered term-based and fixed-rate loans on stablecoins, noting that borrowing and lending would stop in December 2023.
In a follow-up tweet, chief engineer Alberto Cuesta Cañada thanked “everyone for all your support throughout these years.”
Yield Protocol’s website lists backers such as Paradigm, Framework Ventures, CMS and Robot Ventures. The platform attracted over $22 million in TVL at its peak in April 2022, and today stands at just over $2 million.
A protocol spokesperson cited lack of demand and regulatory uncertainty as the main drivers behind the decision to halt operations.
The decision to phase out is driven by the lack of sustainable demand for fixed rate loans on our platform, along with the increasingly challenging regulatory environment in the US, Europe and the UK.
— Yield Protocol (@yield) October 3, 2023
A team representative did not respond to a request for comment by time of publication.
Yield Protocol is not the only DeFi project that has been phased out in recent weeks. In September, Avalanche-based yield protocol GRO held a DAO vote to cease operations, and in July, Algorand-based lending platform AlgoFi announced its closure in a blog post.
Much of the downturn in DeFi can be attributed to an industry-wide decline in activity. DeFi’s total TVL has fallen 75% from its peak of $320 billion in 2021 to just under $80 billion today – part of a decline in overall onchain activity.
Smaller startups may be among the hardest hit. In a recent tweet, BlockTower Capital founder Ari Paul said there is a growing market for downside rounds with equity between 70 and 90%.
I see a lot of crypto startups with down rounds of 70-90%. No negative signaling imo, the opposite. In many cases a simple necessity, but doing this before it becomes a purely last resort shows maturity and realism. The crazy valuations of the original increases are ‘sunk costs’…
— Ari Paul ⛓️ (@AriDavidPaul) October 2, 2023