About

Alpaca Finance is a lending protocol that enables leveraged yield farming (automated market making) on Binance Smart Chain. Lenders are able to earn yields on their tokens, and the protocol provides borrowers capital efficient undercollateralized loans for leveraged yield farming positions. Alpaca Finance utilizes the liquidity layer of integrated exchanges, which connects LP borrowers and lenders with the purpose of improving capital efficiency.

History

Alpaca Finance is a Decentralized Finance platform for lending, staking, and leveraged yield farming launched on Binance Smart Chain ("BSC"). The protocol had a fair launch in Q1 2021, and throughout the remainder of the quarter grew to add single-asset staking, LP staking vaults, experimental synthetics, as well as the adoption of a deflationary buyback and burn method. Since, the platform has grown to over $1 billion in total-value-locked while continuing to develop partnerships with other protocols and adding staking vaults.

Alpaca seeks to address problems related to capital efficiency within DeFi as well as the volatile nature of the yield farming market. Lenders receive the ability to earn yield for lending their assets through continuous interest accrual of the Alpaca token itself, as well as other popular tokens such as BTC, ETH, and BNB. Undercollateralized loans are often used by borrowers on the platform to increase their farming positions, and thus, their yield. The nature of these loans also enables borrowers the ability to create synthetic shorts.

Alpaca implements a deflationary token buyback and burn method for a percentage of platform fees such as lending interest and liquidations. A portion of certain platform revenues will be burned and removed from the total supply forever, and the more Alpaca is used, the more tokens are burned.