Balancer Labs to shut down; DAO and Foundation to lead protocol

• Balancer Labs is winding down its operations four months after a major security exploit caused a massive drop in total value locked.
• The protocol will transition to a decentralized management model led by the Balancer Foundation and the Balancer DAO.
• Executives cited legal exposure and a broken financial model as primary reasons for the shutdown, aiming for a leaner, more sustainable structure.

Financial Strain and Strategic Pivot

Following a period of mounting financial pressure and a $116 million hack in November, Balancer Labs has officially decided to shut down. Fernando Martinelli, one of the protocol's founders, stated on Monday that the corporate entity had become a liability rather than an asset. He noted that the company has been operating without revenue, making the current corporate structure unsustainable.

Marcus Hardt, CEO of Balancer Labs, explained that the protocol was spending excessively to attract liquidity. This strategy led to the dilution of BAL token holders while failing to generate sufficient revenue to cover operational costs.

The Impact of the November Exploit

The protocol's decline is closely linked to its security struggles. Balancer was once a dominant force in the DeFi space, but its metrics have fallen sharply:

• Peak TVL: Reached $3.3 billion in November 2021.
• Pre-hack TVL: Stood at $800 million in October 2025.
• Post-hack Drop: Lost $500 million in total value locked within two weeks of the $116 million exploit.
• Current TVL: Now sits at approximately $158 million.

Martinelli highlighted that the November exploit created ongoing legal exposure, making it impossible to maintain a corporate entity that carries the burden of past security incidents.

Transition to a Leaner Protocol

The future of the protocol now rests with its community. The proposed "lean continuation path" includes several drastic measures to ensure long-term survival:

• Cutting BAL emissions to zero.
• Restructuring protocol fees to favor the Balancer DAO.
• Significant team size reductions and lower operating costs.

Despite the current crisis, the protocol generated over $1 million in revenue over the past three months. Martinelli argued that the underlying protocol is still functional but was previously buried under an overweight cost structure and flawed tokenomics. Balancer DAO members are now voting on two proposals to finalize this operational restructuring.