Yield Protocol is Shutting Down

Yield Protocol to cease borrowing and lending operations by Dec 31, 2023, citing diminishing demand and regulatory challenges. Limited support post-deadline.

Oct 4, 2023 - 13:16
Yield Protocol is Shutting Down
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On October 3, Yield Protocol publicly announced that it would be ceasing all borrowing and lending operations by December 31, 2023. This decision surprised many, especially considering the project's previous successes and backing from prominent venture capitalists. The primary reasons cited for the shutdown were the diminishing sustainable demand for fixed-rate borrowing and an increasingly stringent regulatory environment, especially in regions like the U.S., Europe, and the U.K.

While the project has committed to supporting its users until the end of 2023, post the deadline, it will only provide limited support, primarily focusing on withdrawals.

Founded in 2020, Yield Protocol carved a niche in the DeFi market by offering fixed-term and fixed-rate lending services. The project's unique value proposition was its emphasis on fixed rates, which Allan Niemerg, the founder of Yield Protocol, believed would significantly enhance the DeFi space. In a 2020 blog post, Niemerg expressed his optimism, stating that the DeFi ecosystem would benefit immensely from fixed-rate, fixed-term borrowing and lending mechanisms.

This optimism wasn't unfounded. In June 2021, Yield Protocol successfully raised $10 million in a Series A funding round, which Paradigm led. The project also garnered support from other significant players in the industry, including Framework Ventures, Symbolic Capital Partners, CMS Holdings, Variant, and the DeFi Alliance. Niemerg, reflecting on the funding, emphasized his belief that fixed-rate borrowing would be pivotal for DeFi to attract its first billion users.

Despite its initial successes and a promising outlook, in March 2023, the project was among several DeFi protocols that suffered losses due to a hack targeting the non-custodial lending protocol, Euler Finance. This breach resulted in a loss of $1.5 million for Yield Protocol. However, showcasing its stability, the protocol managed to fully recover from the incident by June 2023.

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