Balancer Labs winds down amid financial strain from a major hack, while the underlying protocol plans to operate under new governance.
Balancer Labs, the developer behind the decentralized finance protocol Balancer, announced its shutdown on Monday due to mounting financial pressures and a $116 million exploit in November. Founder Fernando Martinelli stated that the company has become a liability, operating without revenue and facing ongoing legal risks from the security incident.
The exploit led to a significant drop in Balancer's total value locked (TVL), which peaked at $3.3 billion in November 2021 but fell to $800 million by October 2025 and further to $158 million recently. CEO Marcus Hardt explained that the protocol's spending on attracting liquidity exceeded its revenue, diluting the value for BAL token holders.
Protocol's Financial Performance
Despite the challenges, Balancer has generated over $1 million in revenue in the past three months, according to Martinelli, indicating that the core protocol functions but suffers from flawed tokenomics and high costs. Hardt noted that this revenue shows potential for recovery if restructuring succeeds.
Executives are proposing a leaner structure, including cutting BAL token emissions to zero, restructuring fees to benefit the DAO, and reducing operating costs as much as possible. The Balancer DAO will vote on proposals to shift management to the Balancer Foundation and DAO, aiming for a more sustainable model.
This transition reflects broader efforts in the DeFi sector to adapt after security breaches, with Balancer's executives emphasizing that the protocol retains value and could emerge stronger. DAO members have been urged to participate in the upcoming votes on operational and tokenomic changes.
