Balancer Labs, the core team behind the long-running DeFi protocol Balancer, is winding down its corporate operations after a major exploit drained more than $100 million from its pools. The protocol itself will continue under a DAO and foundation structure, with Balancer Labs stepping back as a legal entity.
How the $128M Balancer Exploit Happened
On November 3, 2025, attackers hit Balancer’s V2 smart contracts and stole about $128 million in crypto across several chains. The exploit targeted “Composable Stable” pools on networks including Ethereum, Arbitrum, Base, Polygon, and others that relied on the same vulnerable code.
Security researchers later showed that the attacker exploited rounding errors and precision issues in Balancer V2’s swap and invariant calculations. By chaining many swaps, the exploiter turned tiny rounding losses into large price distortions and drained liquidity in under an hour. Balancer said the breach did not affect V3 pools and began working with security firms and auditors to study it.
Why Balancer Labs Is Shutting Down
Four months after the hack, Balancer co‑founder Fernando Martinelli said Balancer Labs will close as a company. He cited legal risks posed by the November exploit and the difficulty of supporting a corporate entity that generates little sustainable revenue under the current design.
The team has proposed shifting responsibility for the protocol to the Balancer DAO, a foundation, and external service providers. Under the plan, BAL token emissions would drop to zero, fee structures would change to send more revenue directly to the DAO, and operating costs and headcount would shrink. DAO members are now being asked to vote on these governance and tokenomics changes.
The protocol is not going offline even though Balancer Labs is closing. Future updates, security efforts, and ecosystem collaborations are anticipated to be supervised by the DAO and foundation. Recent data shows the protocol still generates over one million dollars in revenue in three months, even after the exploit.
However, Balancer’s total value locked has fallen sharply from its peak. TVL dropped from about $3.3 billion in November 2021 to roughly $800 million by October 2025, then slid by another $500 million after the hack to around $158 million. The exploit also hit Balancer’s reputation as one of DeFi’s older automated market makers, and its BAL token price has faced pressure since the attack.
READ MORE: Ethereum Price Outlook as MVRV Enters Generational Buy Zone
