Balancer Proposes Orderly Shutdown After $128M Hack

Balancer’s decentralized protocol filed a governance proposal on Sept. 14 to wind down operations and distribute remaining treasury assets to BAL token holders. The vote is scheduled for Sept. 25–29.

The proposal would end new business development, begin an orderly wind-down and set a timetable for liquidity and token redemptions. Liquidity providers would face the first operational change on Oct. 30: pools that can be paused would be placed into withdrawals-only mode, with recovery mode enabled where needed to preserve exits. Pools that cannot be paused would remain open but protocol fees would be reduced to zero where contract rules permit. A detailed, pool-by-pool plan has not been published. Funds recovered from the Nov. 3, 2025 exploit would be held separate from the treasury distribution and reserved for affected liquidity providers.

The exploit on Nov. 3, 2025 drained about $128 million from Balancer v2 pools across several blockchains. Balancer Labs, the corporate entity that supported the protocol, closed roughly six months after the attack. Total value locked on the protocol peaked above $3 billion in 2021 and has declined to about $58 million.

Earlier this year the DAO approved a narrower survival plan. In April token holders ended BAL emissions, redirected protocol fees to the treasury and cut operating costs so a smaller team could focus on Balancer v3. Staff was reduced from about 25 people to the equivalent of 12.5 full-time employees and the operating budget was cut by roughly one-third.

The recovery strategy centered on v3 features such as Boosted Pools and AutoRange Pools (formerly reCLAMM), which required further security work before reaching production. Most revenue continued to come from v2, and v3 did not grow quickly enough to replace the lost income.

Marcus Hardt, former Balancer Labs chief executive, noted that the v3 product functioned but failed to attract sufficient commercial commitments. He said the November exploit repeatedly came up in partner discussions and lengthened decision cycles, and that he could not identify a funded path to support the level of development v3 needed. “The product worked. It did not sell enough,” Hardt added.

The proposal outlines a redemption process for BAL holders if the shutdown passes. A six-month redemption window is proposed to open at the end of May 2027, when holders could burn BAL for a pro-rata share of DAO-managed treasury assets based on an opening snapshot. The proposal estimates the managed treasury at at least $9 million; the final payout will depend on asset prices, remaining expenses, third-party claims and an audit of DAO-controlled holdings. A second distribution would be available only to addresses that participated in the first redemption round; holders who skip the initial window would forfeit access to the follow-on allocation.

The protocol code would remain open source, allowing developers to fork or continue parts of the technology independently. Some former team members are reportedly considering forking or continuing development. Aave founder Stani Kulechov called the proposed closure “sad” and added, “Balancer has been pioneering DeFi. Huge respect for the team.”

If the vote passes, the next steps are publication of the pool-level exit arrangements and monitoring whether remaining partners migrate liquidity, fork Balancer’s code, or discontinue products built on the protocol.