Balancer Labs to wind down after $128M exploit, protocol to continue under DAO

Balancer Labs, the corporate entity behind the Balancer decentralized finance protocol, plans to wind down operations following a Nov. 3, 2025 exploit that drained an estimated $128 million from Balancer v2 pools across multiple blockchains. The protocol will continue under decentralized governance, with core contributors pursuing a new service provider, Balancer OpCo, pending a community vote.

Co-founder Fernando Martinelli disclosed the decision in a forum post, citing ongoing legal exposure tied to the v2 incident. He wrote that maintaining a company with potential liability for past security issues while the protocol advances under a DAO “is not responsible stewardship.” He also noted that Balancer Labs operates without revenue and has become a liability to the protocol’s future.

Martinelli stressed the plan does not shut down the protocol or its products. He pointed to recent activity, noting the protocol generated more than $1 million in annualized fees. He argued the system can function through its DAO, its foundation, and a service provider model. “What failed was not the technology. What failed was the economic model wrapped around it, and the accumulated weight of security incidents that eroded the trust we built,” he wrote. “I have considered whether the right answer is to shut everything down … The market signal is brutal.”

A lean restructuring plan backed by Martinelli includes ending BAL token emissions, winding down the veBAL governance model, and directing 100% of protocol fees to the DAO treasury. The plan also reduces the V3 protocol share to 25%, initiates a BAL buyback to provide exit liquidity for holders, and narrows development to reCLAMM, liquidity bootstrapping pools, stable and liquid staking token pools, and weighted pools deployed on fewer chains. The core team intends to publish formal governance proposals on tokenomics and operations.

Under the proposed transition, core contributors now at Balancer Labs would move to Balancer OpCo if the DAO approves the arrangement. After Balancer Labs closes, Martinelli plans to step back from any formal role, while expressing support for the technology and the team’s focus on products and revenue. He wrote that the next 12 months will be used to test for product-market fit.

CEO Marcus Hardt commented on X that recent months have been “extremely hard,” while noting ongoing usage. “Balancer still has real products,” he wrote. “Boosted pools are generating real usage. Our fungible concentrated liquidity solution is coming back stronger after the security work.” He added that the protocol still has room to develop products and revenue streams suited to Balancer.

The Nov. 3, 2025 exploit targeted Balancer v2 pool logic through a rounding flaw in swap calculations. Attackers drained funds from affected pools across several chains. Martinelli attributed the wind-down of the corporate entity to the legal risks created by the incident and the need for the protocol to operate under DAO-led stewardship.

According to Martinelli, the protocol’s governance has shifted over time to decentralized structures that reduce reliance on a single company. He outlined that restructuring would clear a path for the DAO to receive all protocol fees, streamline costs, and focus on products with measurable usage, while the buyback offers liquidity options for BAL holders. He wrote that the wind-down aims to address legal overhang from prior incidents while allowing the DAO and foundation to guide development and funding.