Balancer Labs, the company that developed and maintained the decentralized exchange protocol Balancer, has announced that it will cease operations following a significant security incident in November 2025. The protocol, once considered an important pillar in the decentralized finance (DeFi) sector, lost approximately $110 million in digital assets during the breach, further deepening challenges for the organization.
Legal Exposure And Operational Pressures
Established as the core corporate entity behind the Balancer protocol, Balancer Labs played a central role in software development, research, and ecosystem coordination. The company’s team included co-founder Fernando Martinelli and CEO Marcus Hardt, both of whom were instrumental in the platform’s rapid rise and community engagement. Following the 2025 exploit, Martinelli highlighted persistent legal exposure and unsustainable revenue streams as the primary reasons for ending business operations.
In a lengthy community forum post, Martinelli noted the organization’s legal risk had become unmanageable, stating that Balancer Labs now represented a liability outweighing its benefits for the protocol’s long-term future. He attributed this shift largely to ongoing legal burdens linked to the latest high-profile exploit and the lack of a viable business model after the incident.
Sharp Decline In Ecosystem Fundamentals
Balancer reached its highest total value locked (TVL) in late 2021 at around $3.5 billion, joining other leading DeFi platforms such as Aave, Uniswap, and Curve at the forefront of permissionless finance. However, after this peak, Balancer’s TVL declined steadily, plunging to approximately $157 million—a sharp 95% decrease from its high. The most recent security breach alone resulted in a rapid $500 million outflow over just two weeks.
Market capitalization has fallen to $10 million, and the BAL token has dropped to $0.16 from previous highs. Despite these difficulties, protocol fee generation surpassed $1 million over the most recent quarter, though this sum remains inadequate to support the organization’s current infrastructure.
Marcus Hardt explained that annual expenditures to motivate liquidity providers were outpacing revenue, leading to value erosion for BAL token holders.
DAO Transition And Buyback Program
Leadership at Balancer Labs has laid out a restructuring plan aimed at sustaining the core protocol while protecting stakeholder interests. The primary proposal involves ending all BAL token emissions, which Martinelli described as a cycle consuming more value than it delivers. He also called for discontinuing the veBAL governance model, arguing that it had come under the disproportionate influence of meta-governance entities.
A key aspect of the plan is the adjustment of protocol fee distribution, sending all revenue directly to the decentralized autonomous organization’s (DAO) treasury instead of the existing 17.5% allocation. The share of v3 liquidity providers would be set at 25% to better align incentives.
A buyback scheme is being prepared to give BAL holders an orderly exit at what the team says are fair valuations. Staff members are also expected to migrate to a proposed new operational company, Balancer OpCo, pending governance approval. Martinelli intends to stay connected in an advisory role but will no longer serve in an official capacity.
The revised roadmap focuses on five key pool types and emphasizes expansion to non-EVM blockchains. Two new governance proposals covering restructuring and tokenomics adjustments are now open for community review. BAL traded at $0.72 at the start of the week.
