The decision comes after extensive deliberation with various stakeholders and is set to bring about a significant shift in the DeFi landscape.
Yield Protocol is a multichain protocol for collateralized fixed-rate, fixed-term borrowing and lending. its design allows anyone to design financial strategies that others can leverage without giving them access to their funds.
The protocol enables users to earn Ethereum rewards directly for providing liquidity to the platform. Yield Protocol is a DeFi protocol that aims to provide a new and exciting way to earn rewards.
Yield Protocol said that the closure means that its scheduled March 2024 fixed rate series launch will no longer hold.
As of this announcement, borrowing and lending activities on the Yield Protocol will be restricted solely to the December 2023 series.
Before this announcement, the firm in March, experienced a security breach linked to Euler Finance, resulting in a loss of $1.5 million.
This incident was part of a larger attack that affected 11 protocols, resulting in over $195 million in losses. In response to this hack, the company devised and shared a recovery plan to address the impact on its users.
Weeks later, it revealed that it was launching Cacti, a web-based interface for interacting with web3 protocols using natural language requests. It uses OpenAI function calling to provide a seamless user experience.
While still in alpha and under active development, Yield Protocol said that Cacti is being open-sourced under an AGPLv3 license to encourage collaboration and improvement by web3 developers.
December 29th, 2023 deadline
Furthermore, it said that all liquidity providers participating in the March-September (MS) strategies will no longer accrue fees.
The end of the protocol will be on December 29th, 2023, after all activities and hanging processes, such as borrowing and lending, are concluded.
In the course of shutting down, Yield Protocol has assured users of its continued support throughout the December series. It added that it will also provide withdrawal support after the closure of operations to all users.
Crypto collapses, crime, and regulations
The cryptocurrency industry has faced significant challenges in recent times, beginning with a series of notable incidents such as the collapses of platforms like FTX, Terra Luna, and Celsius, all of which occurred last year.
Furthermore, the industry has been grappling with regulatory conflicts involving government authorities like the US SEC.
Furthermore, cyberattacks have proven to be a significant threat, resulting in losses of nearly $1 billion this year alone.
“While we think that the future is bright for DeFi and fixed rate markets in DeFi, we felt this decision was necessary because there is currently no sustainable demand for fixed-rate borrowing on Yield Protocol,” it said.
“Additionally, the current regulatory environment in the US, combined with increasing regulatory requirements in Europe and the UK, make it challenging for us to continue to support the Yield Protocol.”