Balancer Labs to Close After $110M Hack

Balancer Labs, the company behind the Balancer decentralised exchange, is set to shut down after struggling with the fallout from a major 2025 exploit and ongoing financial pressure, according to co-founder Fernando Martinelli.

The protocol itself isn’t disappearing, but it will carry on in a much leaner form under a new structure.

The move comes after a November 2025 attack on Balancer’s v2 pools that drained roughly $110 million from assets like osETH, WETH, and wstETH. It was the project’s third major security incident, and this time the damage went beyond user funds. 

According to Martinelli, the legal and financial consequences made it difficult to justify keeping the existing company in place. In a governance post, he wrote: 

“BLabs, as a corporate entity, has become a liability rather than an asset to the protocol’s future. It’s no longer sustainable without revenue.”

The team did consider shutting everything down entirely, but the protocol is still generating fees, and that income, while modest, was enough to keep things alive in a reduced form.

From DeFi Heavyweight to Survival Mode

Balancer was one of the standout names during DeFi’s boom in 2021, at one point managing close to $3.5 billion in total value locked and competing alongside platforms like Aave, Uniswap, and Curve.

At its peak in October that year, TVL reached $2.96 billion, with annual fees topping $6 million. Today, the picture looks very different. TVL has dropped to about $157 million – a decline of roughly 95%.

The protocol’s token tells a similar story. BAL’s market cap has fallen to around $10 million, and while it has traded as low as $0.16 against a fully diluted valuation of $11 million, it was sitting at about $0.72 on Tuesday morning – still down nearly 88% from its all-time high.

Even so, Balancer hasn’t completely dried up. Over the past three months, it has brought in more than $1 million in annualised fees. That’s nowhere near enough to support its old setup, but it does give the project a base to rebuild from.

A Hard Reset on Tokenomics and Governance

The restructuring plan is blunt and, in some areas, long overdue.

Token emissions will be cut to zero, ending what Martinelli described as a “circular bribe economy” that cost more than it delivered. The veBAL governance system is also on the way out. According to him:

“In practice, voting power had been dominated by meta-governance platforms like Aura and related incentive markets, leading to decisions that didn’t reflect the protocol’s core contributors.”

Under the new model, all protocol fees will go directly to the DAO treasury, up from 17.5% today. At the same time, Balancer will reduce its v3 fee share to 25% in an attempt to attract more organic liquidity back to the platform.

There are also plans for a BAL buyback program, aimed at giving tokenholders a way to exit if they’re not convinced by the new direction.

“If you believe in the restructured Balancer, you stay. If you don’t, you get a fair exit,” Martinelli wrote.

Smaller Team, Tighter Focus

As part of the transition, a core group from Balancer Labs is expected to move into a new entity, Balancer OpCo, assuming governance signs off. Martinelli himself won’t take on a formal role going forward, though he said he’s open to advising if needed.

The protocol will also narrow its focus significantly. Instead of trying to cover a wide range of products, it will concentrate on five areas: reCLAMM pools, liquidity bootstrapping pools, stablecoin and liquid staking pools, weighted pools, and expansion beyond EVM-compatible chains. Everything else is being cut.

A Sign of the Times for DeFi

Balancer’s situation isn’t unique. Across DeFi, projects that once chased rapid growth are now being forced to rethink their models as liquidity dries up and scrutiny increases.

For Balancer, this is essentially a reset. Whether a smaller, DAO-led version of the protocol can stabilise and eventually grow again will depend on how well this new structure holds up under pressure.