Balancer Labs Shuts Down, Eyes a Fresh Start

Balancer co-founder Fernando Martinelli announces BLabs shutdown after a damaging exploit, outlining a leaner path forward for the protocol.

Balancer Labs is shutting down. Co-founder Fernando Martinelli made the announcement in a detailed post addressed to the Balancer community. 

He cited legal risks from the November 2025 exploit as the primary driver. The corporate entity, he said, had become a burden rather than a benefit. 

Martinelli framed the shutdown as a step toward responsible stewardship of the protocol.

Why Balancer Labs Is Closing After the November Exploit

The November 3, 2025 v2 exploit triggered serious and ongoing legal exposure for Balancer Labs. 

Martinelli noted that carrying that liability while the protocol moves forward made no sense. The protocol had already evolved past the need for a traditional company at its center.

The DAO, Foundation, and service-provider model now drive day-to-day operations. According to Martinelli, that structure is the right fit going forward. 

He confirmed that key BLabs team members will move to Balancer OpCo, pending a governance vote.

Marcus and Danko are set to present the operations proposal through a BIP. Martinelli expressed full support for that process.

Balancer Protocol Still Generating Revenue Despite the Crisis

Despite calls for a complete shutdown, Martinelli ruled that option out. 

His reasoning was straightforward. The protocol generated over one million USD in total fees over the past three months on an annualized basis.

He pointed out that the technology still works. The core issue, in his view, is the broken economics wrapped around it. 

Martinelli described the problem as a “fixable” one, not a fundamental failure.

He highlighted the continued commitment of contributors like Danielmk, Danko, Xeonus, Fabio, and Marcus. These team members stayed through the worst stretch in the protocol’s history and returned with a concrete plan.

Related Reading: Crypto Hack Alert: USR Stablecoin Crash After Exploit as 50M Tokens Minted Without Backing

Tokenomics Overhaul and What Martinelli Supports

Martinelli laid out a clear set of changes he backs for the protocol’s restructure. 

First on the list is cutting BAL emissions to zero. He argued that emissions have been diluting holders while funding an expensive circular bribe system that costs more than it generates.

He also supports winding down veBAL. 

The model, he said, became a tool for meta-governance capture by players like Aura and Humpy through bribe markets. A leaner governance setup is what the protocol needs now.

On fees, Martinelli supports routing 100% of protocol fees to the DAO treasury. He also backs reducing the V3 protocol share to 25% to bring in more organic liquidity. 

The current split, where the DAO captures just 17.5% of generated fees, is not sustainable.

A BAL buyback was another point of support. Martinelli described it as fair dealing, giving holders who want to exit a clean off-ramp. 

Those who believe in the restructured protocol can stay. He also endorsed a tighter product focus on reCLAMM, LBPs, stablecoins, LST pools, and fewer EVM chain deployments.

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