Balancer Labs Announces Shutdown, $128 Million Hacker Attack Severely Damages Protocol Operations

Famous liquidity protocols and decentralized trading platforms Balancer’s parent company, Balancer Labs, officially announced today that they are ceasing operations. However, co-founder Fernando Martinelli emphasized that the protocol itself will continue to exist and will restart through a streamlined restructuring. The next twelve months will be critical for survival.

Trigger: November hack causes $128 million financial crisis

On November 3, 2025, Balancer v2 liquidity pools on multiple blockchains were attacked. The attacker exploited a “rounding flaw” in the protocol’s swap logic to precisely extract liquidity, ultimately resulting in approximately $128 million in asset outflows. This is one of the largest single protocol vulnerability incidents in DeFi history, severely damaging the protocol’s finances and exposing Balancer Labs to ongoing legal liabilities.

(After $110 million theft: Balancer DAO plans to distribute $8 million in user compensation)

Martinelli admitted in the announcement that maintaining a corporate entity burdened with legal responsibilities from multiple past security incidents is no longer feasible to push the protocol forward: “Balancer Labs has shifted from assets to liabilities. The company is currently at zero income, and continuing to sustain the corporate structure lacks practical meaning.”

Not the end: Protocol will still operate, generating millions annually

Martinelli emphasized that what is closing is the corporate entity, not the protocol itself. He pointed out that Balancer’s protocol generates over $1 million in annualized fee revenue and continues to produce real income.

Martinelli believes the root cause of failure is not the technology itself but the economic model surrounding it and the erosion of user trust due to multiple security incidents. His conclusion is: as long as these two issues can be addressed, the protocol still has a chance to turn around.

Streamlined restructuring plan: new architecture, new token model, new governance approach

Martinelli proposed a “lean” restructuring plan that cuts unnecessary costs and reshapes the token economy, allowing the protocol to operate with lower operational burdens.

In terms of token economics, the plan includes stopping BAL token emissions, ending the current veBAL governance model, and structurally adjusting the fee distribution mechanism so that the DAO treasury receives 100% of protocol fee revenues, while reducing the fee share in V3 to 25%. Additionally, a BAL buyback mechanism will be introduced to provide long-term holders with liquidity exits and reduce selling pressure.

For product focus, the restructured Balancer will concentrate resources on core products including reCLAMM liquidity solutions, Liquidity Bootstrapping Pools, Stables pools, Liquidity Staking Token (LST) pools, and fewer on-chain weighted pools. Reducing cross-chain presence in favor of deeper single-chain liquidity is the core strategy of this transformation.

He stated that a formal token economy reorganization proposal and operational restructuring plan will be released separately by the core team and submitted for governance voting. After Balancer Labs dissolves, existing core team members are expected to transition to a new operational entity, “Balancer OpCo,” which will also require governance approval before execution.

Balancer Labs CEO statement: perseverance and conviction in tough times

Balancer Labs CEO Marcus Hardt also posted on X, acknowledging that the past few months have been extremely difficult. Despite this, he remains confident in the existing products of the protocol. He pointed out that Boosted Pools are still generating actual user activity, and after security enhancements are completed, the protocol’s alternative centralized liquidity solutions will be relaunched and return to the market on a more solid foundation.

Hardt expressed his belief that Balancer still has room to develop products and revenue sources that truly fit its positioning, and he has never given up hope for the protocol’s future.

Regarding Martinelli himself, he stated that he has left the protocol after Balancer Labs officially shut down, reaffirming his belief in the underlying technology of Balancer and expressing confidence in the remaining team members, hoping they can lead the protocol to rediscover product-market fit in future challenges.

This article about Balancer Labs announcing the shutdown and the $128 million hack that severely impacted the protocol was first published by Chain News ABMedia.