Hassan Maishera
TL;DR
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Balancer Labs is shutting down after over $128 million was drained in an exploit last November.
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However, the co-founder, Fernando Martinelli, said the protocol will continue to operate after restructuring to attain a “lean” economic model.
Balancer Labs to Adopt a Lean Economic Model Following Its Recent Hack
Balancer Labs, the corporate entity behind the DeFi protocol Balancer, announced on Monday that it is winding down operations.
While announcing this, co-founder Fernando Martinelli stated that this latest development comes after the Nov. 3, 2025, exploit that affected Balancer v2 pools across multiple chains. The incident, which drained an estimated $128 million, was attributed to a rounding flaw in its swap logic that attackers exploited.
Balancer DAO distributed $8 million in recovered assets to affected liquidity providers three weeks after suffering a $110 million exploit. However, it wasn’t enough to keep the protocol operational.
Martinelli added that,
"The Nov 3, 2025, v2 exploit created real and ongoing legal exposure. Maintaining a corporate entity that carries the liability of past security incidents, while the protocol itself needs to move forward unburdened, is not responsible stewardship."
The co-founder also mentioned that Balancer Labs has become a liability rather than an asset to the protocol's future, as it operates without revenue.
He pointed out that the protocol has evolved to function through its DAO, foundation, and a service provider model without the need for a traditional corporate entity.
Finally, the co-founder revealed that core members of the team will transition to a new entity, Balancer OpCo, subject to a governance vote.
He noted that this is not a complete shutdown of the protocol.
"I have considered whether the right answer is to shut everything down … The market signal is brutal. But here's what I keep coming back to: the protocol is still generating real revenue," Martinelli added.
He noted that what failed was not the technology, but rather the economic model wrapped around it. Martinelli revealed that Balancer generated more than $1 million in annualized fees and argued that the protocol remains functional despite an inefficient tokenomics model and cost structure.
