Balancer Labs shuts down 4 months after $100M+ exploit, protocol to continue

Balancer Labs, the team behind the decentralized finance protocol Balancer, is shutting down after mounting financial pressure and a $116 million hack in November, with executives proposing continuation of the protocol under a leaner, more cost-effective structure.

“After careful consideration, I have decided to wind down Balancer Labs. This is not a decision I take lightly,” one of Balancer Protocol’s founders, Fernando Martinelli, said on Monday, adding that Balancer Labs has become a “liability rather than an asset to the protocol,” as it has been operating without revenue.

Balancer Labs CEO Marcus Hardt added that it was spending too much to attract liquidity relative to the revenue the protocol is making, a strategy that came at the cost of diluting Balancer (BAL) token holders.

Source: Marcus Hardt

Balancer was one of the more notable DeFi protocols during the 2020–2021 bull market, reaching a peak of $3.3 billion in total value locked (TVL) in November 2021.

However, that figure fell to $800 million by October 2025, with the hack leading to another $500 million TVL drop over the next two weeks. Balancer’s TVL has since fallen to $158 million, showing how challenging it is for DeFi protocols to recover from large-scale hacks.

Martinelli said the November exploit “created real and ongoing legal exposure” and that maintaining a corporate entity that carries the liability of past security incidents wasn’t sustainable.

Balancer Labs executives outline restructuring plan

Moving forward, Hardt and Martinelli are pushing for Balancer’s future to be managed by the Balancer Foundation and the protocol’s decentralized autonomous organization.

Martinelli advocated for Balancer to adopt a more “lean continuation path,” which involves cutting BAL emissions to zero, restructuring fees to enable Balancer’s DAO to capture more revenue, reducing the team as much as possible and targeting lower operating costs.

“Balancer still has real value to build from here. If we can make this transition work, we have a real chance to build a stronger and more sustainable protocol on the other side of it,” Hardt said.

Balancer DAO members have been asked to vote on two proposals reflecting possible changes in Balancer’s operational restructuring and BAL’s tokenomics.

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Despite the tokenomics issues, Martinelli noted that Balancer is “still generating real revenue” at over $1 million across the past three months:

“That’s not nothing — that’s a functioning protocol buried under a broken tokenomics model and an overweight cost structure,” he said.

“The problem isn’t that Balancer doesn’t work. The problem is that the economics around Balancer aren’t working. Those are fixable.”

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