Balancer has proposed shutting down its decentralized exchange protocol and returning more than $9 million in remaining treasury assets to BAL holders after its post-exploit operating plan failed to generate enough revenue.
Summary
- Balancer has proposed winding down the protocol after its post-exploit restructuring failed to generate enough revenue.
- The remaining treasury, currently worth more than $9 million, would be distributed to BAL holders through a phased process.
- Protocol revenue fell from $1.13 million in October 2025 to $371,000 in November following the $128 million exploit and reached $56,781 in August.
- Liquidity providers would have until Oct. 30 to prepare their exits before Balancer moves to minimal withdrawal infrastructure from Nov. 1.
- BAL holders are scheduled to vote on the wind-down proposal from Sept. 25 to Sept. 29.
Balancer Labs CEO Marcus Hardt laid out the plan in a governance proposal published Monday, saying the protocol delivered the products promised under a leaner structure adopted earlier this year but did not bring in enough revenue to sustain operations.
The proposal would begin a phased shutdown in October before reducing Balancer to the infrastructure needed to let users withdraw funds. BAL holders are scheduled to vote on the plan through a snapshot vote running from Sept. 25 to Sept. 29.
Balancer wind-down follows failed revenue recovery
Balancer Labs shut down in March as the organization cut costs following financial pressure tied to a major exploit in November 2025. Executives kept the underlying protocol running under a smaller operating structure in an attempt to make the business sustainable.
At the time, Hardt said Balancer Labs had become a liability to the protocol because of its operating costs and legal exposure stemming from the exploit. The protocol had been spending heavily to attract liquidity while generating insufficient revenue to support those expenses.
Six months later, Hardt said the cost side of that restructuring had worked, but revenue had not recovered enough to justify continuing.
“What did not come was enough revenue. Most of the protocol’s revenue still comes from v2, and v3 revenue has not grown to replace it. The product worked. It did not sell enough,” Hardt wrote on X.
Data from DefiLlama showed monthly protocol revenue dropping from $1.13 million in October 2025 to $371,000 in November, when Balancer suffered the exploit. Revenue continued falling during 2026 and reached $56,781 in August.
Hardt said the November attack remained a problem for Balancer even though it targeted legacy v2 infrastructure rather than the newer v3 architecture.
“The November 2025 exploit hit legacy v2 pools. v3 is a different architecture, but the event followed the name into every conversation since and made traction harder to build,” he wrote on the governance forum.
In a separate X post, Hardt said he had “underestimated how much the exploit would continue to limit adoption.”
November exploit left Balancer facing a $128 million loss
The attack occurred on Nov. 3, 2025, when an attacker targeted Balancer v2 Composable Stable Pools across several networks.
Initial estimates placed the losses at around $70 million before on-chain investigators identified further transfers. The amount later climbed above $128 million as assets were drained across Ethereum and several layer-2 networks.
As crypto.news previously reported, Balancer later identified a rounding bug in its “upscale” function as the technical cause of the attack. The flaw allowed attackers to manipulate pool balances during token swaps and extract assets including WETH, osETH and wstETH.
Balancer paused affected pools, disabled the creation of vulnerable pools and stopped rewards while it worked with security firms and other protocols to trace and recover assets.
Some of the money was eventually recovered. StakeWise regained roughly $19 million of osETH, representing 73.5% of the amount of that asset stolen during the attack, while the remaining portion had already been converted into ETH.
Balancer later put forward a framework to return roughly $8 million in rescued assets to affected liquidity providers. The plan called for repayments to be made on a pro-rata basis according to liquidity provider token holdings recorded before the exploit, with recovered assets returned to the pools from which they had been taken.
Recovery efforts extended to networks using Balancer-related infrastructure. Gnosis Chain activated a December hard fork to recover $9.4 million that had been frozen following the attack, requiring node operators to upgrade their clients to follow the modified chain.
BAL holders could receive remaining treasury assets
The latest proposal would start winding down Balancer next month, beginning with an end to new business development.
Liquidity providers would have until Oct. 30 to prepare their exits. Pools capable of being paused would then move into withdrawal-only mode, preventing new activity while allowing existing users to remove liquidity.
Pools that cannot be paused would remain operational, though Balancer intends to reduce the protocol fee to zero where existing contracts permit the change.
Starting Nov. 1, the protocol would retain only the infrastructure required to process withdrawals. The DAO would then begin shutting down, with a smaller team remaining in place to handle the transition and related operational work.
Up to $400,000 of treasury assets would be reserved to pay for the wind-down.
The remainder, currently valued at more than $9 million, would ultimately go to BAL holders. The first distribution is scheduled for May 2027 and would require participating holders to burn their BAL tokens in return for a pro-rata share of the treasury assets.
A second distribution would cover funds left over from the wind-down budget and assets that were not claimed during the first round. Six months later, the protocol would conduct a final sweep for any remaining assets.
Hardt argued that keeping the existing structure running would continue consuming treasury funds without fixing the revenue problem that emerged after the restructuring.
“Continuing on the current path spends the treasury to arrive at the same place later. That treasury belongs to BAL holders,” he said. “The question is whether what remains reaches holders while it is still substantial, or is spent first on a path that has already been tried.”
The proposal still requires approval from BAL holders. If the Sept. 25 to Sept. 29 snapshot vote fails, Balancer would continue operating under its existing framework rather than proceeding with the proposed shutdown.
