Balancer Labs, the group behind the decentralized finance protocol Balancer, is shutting down after mounting monetary stress and a $116 million hack in November, with executives proposing continuation of the protocol beneath a leaner, less expensive construction.
“After cautious consideration, I’ve determined to wind down Balancer Labs. This isn’t a call I take frivolously,” one in all Balancer Protocol’s founders, Fernando Martinelli, stated on Monday, including that Balancer Labs has grow to be a “legal responsibility somewhat than an asset to the protocol,” because it has been working with out income.
Balancer Labs CEO Marcus Hardt added that it was spending an excessive amount of to draw liquidity relative to the income the protocol is making, a technique that got here at the price of diluting Balancer (BAL) token holders.
Balancer was one of many extra notable DeFi protocols in the course of the 2020–2021 bull market, reaching a peak of $3.3 billion in complete worth locked (TVL) in November 2021.
Nevertheless, that determine fell to $800 million by October 2025, with the hack main to a different $500 million TVL drop over the subsequent two weeks. Balancer’s TVL has since fallen to $158 million, exhibiting how difficult it’s for DeFi protocols to get better from large-scale hacks.
Martinelli stated the November exploit “created actual and ongoing authorized publicity” and that sustaining a company entity that carries the legal responsibility of previous safety incidents wasn’t sustainable.
Balancer Labs executives define restructuring plan
Transferring ahead, Hardt and Martinelli are pushing for Balancer’s future to be managed by the Balancer Basis and the protocol’s decentralized autonomous group.
Martinelli advocated for Balancer to undertake a extra “lean continuation path,” which includes chopping BAL emissions to zero, restructuring charges to allow Balancer’s DAO to seize extra income, decreasing the group as a lot as potential and focusing on decrease working prices.
“Balancer nonetheless has actual worth to construct from right here. If we are able to make this transition work, we have now an actual probability to construct a stronger and extra sustainable protocol on the opposite facet of it,” Hardt stated.
Balancer DAO members have been requested to vote on two proposals reflecting potential adjustments in Balancer’s operational restructuring and BAL’s tokenomics.
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Regardless of the tokenomics points, Martinelli famous that Balancer is “nonetheless producing actual income” at over $1 million throughout the previous three months:
“That’s not nothing — that’s a functioning protocol buried beneath a damaged tokenomics mannequin and an obese price construction,” he stated.
“The issue isn’t that Balancer doesn’t work. The issue is that the economics round Balancer aren’t working. These are fixable.”
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