AlphaFi is winding down AlphaLend after a misconfiguration in the protocol's ALPHA oracle created undercollateralized debt. The Sui Foundation has fully covered the resulting bad debt shortfall, ensuring user funds remain protected.
The Sui Security Team identified the oracle misconfiguration, which supplies price data that lending protocols use to assess collateral values. The issue allowed certain ALPHA-backed borrow positions to become substantially undercollateralized, meaning the collateral no longer sufficed to cover outstanding loans.
Maintenance Mode and Withdrawal Process
AlphaFi has entered maintenance mode as it completes an orderly wind-down. Withdrawals remain available for users to recover their assets, but new deposits and loans are now paused. Existing borrowers have been asked to unwind their positions.
The shutdown also affects users accessing strategies through Slush Wallet. The WAL vault lock period and the ALPHA vault lock period have been removed, allowing instant withdrawals of SUI, WAL, DEEP, USDC, and ALPHA without waiting periods. Users with pending withdrawal requests should cancel and resubmit to ensure funds arrive immediately.
Sui Security Response
The Sui Foundation's intervention ensured that AlphaFi users would not absorb the shortfall, with principal and generated yields remaining protected. AlphaFi has committed to supporting the Sui Foundation's investigation and remediation efforts by providing records and technical assistance.
The Sui team indicated that its security tooling, which identified the oracle misconfiguration, will become available to other Sui DeFi protocols following its formal launch later this fall.
AlphaFi will continue operations during the wind-down period until all users have withdrawn their funds, after which the protocol will cease operations within the Sui ecosystem.
