Balancer Labs Shuts Down After $110 Million DeFi Hack — What Happens to the Protocol

TLDR

• Balancer Labs, the corporate entity behind DeFi exchange Balancer, is shutting down after a $110 million exploit in November 2025
• Total value locked has crashed 95% from a $3.5 billion peak in 2021 to just $157 million today
• BAL token emissions will be cut to zero as part of a major restructuring plan
• The protocol will continue under the Balancer Foundation and its DAO, with fees redirected 100% to the treasury
• A BAL token buyback is planned to give holders a fair exit option

Balancer Labs built one of DeFi’s most used trading protocols. Now the company behind it is closing down.

Co-founder Fernando Martinelli announced this week that Balancer Labs, the corporate entity that built and funded the Balancer decentralized exchange, is winding down. The decision follows a November 2025 hack that drained roughly $110 million in digital assets — the third known security breach in the project’s history.

Martinelli said the exploit “created real and ongoing legal exposure,” making the company unsustainable. He wrote in a governance post that Balancer Labs had become “a liability rather than an asset to the protocol’s future.”

CEO Marcus Hardt added the company was spending too much to attract liquidity compared to the revenue it was generating. That spending was also diluting Balancer token holders over time.

How Far Balancer Has Fallen

At its peak in late 2021, Balancer held nearly $3.5 billion in total value locked, putting it alongside Aave, Uniswap, and Curve as a core piece of DeFi infrastructure.

That number now sits at $157 million — a 95% drop. The market cap has fallen to $10 million. The token trades at around $0.16, well below its all-time high.

The November hack accelerated the decline. TVL dropped by another $500 million in the two weeks following the exploit.

Despite the losses, Martinelli said the protocol is still generating over $1 million in fees over the past three months. That’s not enough to run the current operation, but enough to support a leaner one.

The Restructuring Plan

Balancer Labs executives are proposing a major overhaul. BAL token emissions would be cut to zero, ending what Martinelli called a “circular bribe economy that costs more than it generates.”

The current veBAL governance model would also be wound down. Martinelli said it had been “captured” by meta-governance protocols, making voting unrepresentative.

Protocol fees would be restructured so the DAO treasury receives 100% of revenue, up from 17.5% currently. The protocol’s v3 share would drop to 25% to attract more organic liquidity.

A BAL buyback program would give token holders exit liquidity at a fair price.

Essential team members from Balancer Labs would move into a new entity called Balancer OpCo, subject to a governance vote. Martinelli himself will step back from any formal role but offered to advise.

The product scope will narrow to five pool types: reCLAMM pools, liquidity bootstrapping pools, stablecoin pools, weighted pools, and non-EVM chain expansion.

Balancer’s DAO has been asked to vote on two proposals covering the restructuring and changes to token economics.

BAL was trading at $0.72 on Tuesday morning.

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