In a significant shake-up for the decentralized finance (DeFi) ecosystem, Balancer Labs has announced its closure following a $110 million exploit that occurred in November 2025. Known for developing one of the most used trading protocols in DeFi, the organization stated that it can no longer sustain its operations under the current structure.
Co-founder Fernando Martinelli disclosed the decision, attributing it to the legal challenges and unsustainable revenue model stemming from the hack, which marked the third major security breach in the project’s history. According to Martinelli, Balancer Labs had become a liability instead of an asset, jeopardizing the protocol’s future.
CEO Marcus Hardt echoed these sentiments, pointing out that the costs incurred in attracting liquidity were far exceeding the generated revenue, ultimately diluting the value for BAL token holders. The fallout from the November hack was significant, with total value locked (TVL) plummeting from its previous high of nearly $3.5 billion in late 2021 to merely $157 million today—a staggering 95% drop.
Protocol Transitioning to a Decentralized Model
Despite these challenges, the Balancer ecosystem is not vanishing. The protocol will continue under the Balancer Foundation and a decentralized autonomous organization (DAO) structure. In a bold move, all protocol fees are now set to be redirected entirely to the treasury, up from the previous 17.5% allocation.
The restructuring plan includes halting BAL token emissions, a strategy meant to eliminate what Martinelli described as a “circular bribe economy” that costs more than it generates. The current v3 governance model is also set to undergo drastic changes, as it has become unfavorably influenced by meta-governance protocols, which have skewed voter representation.
Furthermore, Balancer Labs aims to implement a buyback program to offer BAL token holders a meaningful exit option at fair pricing. Essential core team members are expected to transition into a new entity called Balancer OpCo, contingent on a governance vote, with Martinelli stepping back from formal involvement while offering advisory support.
A New Focus for the Future
As part of its reorientation, Balancer plans to narrow its product offerings to five distinct pool types: reCLAMM pools, liquidity bootstrapping pools, stablecoin pools, weighted pools, and expanding into non-EVM chains. This focused approach aims to foster organic liquidity as the protocol moves forward.
Despite the turbulence, the protocol still generates over $1 million in fees within a three-month span—insufficient for the current operation but adequate enough to support a leaner entity going forward. The Balancer DAO has been tasked with voting on two critical proposals that will shape the future of the protocol and its tokenomics.
With the BAL token trading at around $0.16, the situation remains fluid as the community reflects on this pivotal transition. What remains to be seen is how effectively the protocol can navigate this restructuring phase and regain its footing in the competitive DeFi landscape.
