Balancer plans to distribute $8 million in recovered funds from $128 million exploit

DeFi protocol Balancer is proposing a plan to distribute roughly $8 million in rescued assets to users affected by a major exploit earlier this month that drained more than $128 million from its vaults.

According to Balancer's Thursday proposal, the $8 million in funds up for distribution was recovered through a combination of external white hat interventions and internal rescue operations.

Roughly $28 million was salvaged in total, but $19.7 million in osETH and osGNO is being managed by liquid staking protocol StakeWise.

Balancer is a decentralized exchange and automated portfolio manager that allows users to trade tokens and provide liquidity through self-balancing pools. In early November, attackers exploited a vulnerability in Balancer V2 Composable Stable Pools, draining roughly $128.6 million.

The reimbursement plan adopts a non-socialized model, where rescued funds will only be returned liquidity providers (LP) in the specific pools affected. Distributions will be made pro-rata based on Balancer Pool Token (BPT) holdings at the time of the exploit.

Funds are set to be distributed on a payment-in-kind basis, meaning LPs receive the same tokens that were recovered.

White hats

Under the proposal, six white hat actors who recovered about $3.86 million during the attack will receive 10% bounties capped at $1 million per operation. 

The largest recovery came from a white hat labeled "Anon #1," who rescued $2.68 million on Polygon. Security researcher Bitfinding recovered $963,832 on Ethereum mainnet, while other white hats recovered smaller amounts on Base and Arbitrum.

To claim their bounties, white hats are required to complete identity verification, know-your-client checks, and sanctions screening under Balancer's SEAL Safe Harbor Agreement. Arbitrum-based rescuers have waived their bounties by declining to identify themselves.

Balancer's proposal establishes a 180-day claim window, after which unclaimed assets become dormant and require governance decisions for reallocation.