AlphaFi, a decentralized finance protocol operating on the Sui network, announced it is winding down all operations after a misconfiguration in its ALPHA oracle led to undercollateralized borrow positions and bad debt on AlphaLend, its lending platform. The Sui Foundation stepped in to cover the full shortfall, ensuring the protocol remains solvent and that user funds face no losses.

The Sui Security Team first identified the oracle issue. The misconfiguration supplied inaccurate pricing data for ALPHA collateral, allowing certain borrow positions to become substantially under-collateralized. AlphaFi and the Foundation then coordinated to resolve the debt. AlphaFi confirmed the bad debt has been fully addressed and that all user funds remain safe.

Wind-Down Measures and User Instructions

AlphaFi has placed the entire protocol into maintenance mode. New deposits and loans are suspended across the platform. Existing borrowers must unwind their positions before they can withdraw collateral. Withdrawals stay fully available so users can exit safely.

Additional steps simplify the process for remaining participants. The lock period on the WAL vault has been removed. The ALPHA vault has been discontinued entirely, with its lock period also lifted so holders can withdraw at any time. Users of Slush Strategies can now pull funds directly through the Slush wallet. Withdrawals for the SUI, WAL, DEEP and USDC strategies process instantly rather than under previous waiting periods. Anyone with a pending withdrawal request has been asked to cancel it and resubmit so the new request clears without delay.

Foundation Support and Ongoing Investigation

AlphaFi credited the Sui Foundation with enabling the clean resolution, stating that making users whole was the priority and that Foundation support proved essential. The protocol remains fully solvent after the intervention.

AlphaFi is providing complete records and technical assistance to the Sui Foundation’s continuing investigation. Recovery of the original amounts owed is also under active pursuit. The Foundation’s security tooling, which detected the oracle problem early, is scheduled for wider release later this year to other DeFi projects on Sui.

Path to Full Exit

AlphaFi will keep the wind-down process active until every user has successfully withdrawn remaining funds. Once the final withdrawal is complete, the protocol will leave the Sui ecosystem permanently. The team has stated it will continue posting updates throughout the process and has thanked users and builders who participated during its time on the network.