Balancer Labs, the team behind decentralized finance protocol Balancer, is closing after mounting financial pressure and a $116 million hack in November, with executives proposing to continue the protocol under a leaner, more cost-effective structure.
“After careful consideration, I have decided to wind down Balancer Labs. This is not a decision I take lightly,” one of Balancer Protocol’s founders, Fernando Martinelli, said Monday, adding that Balancer Labs has become a “debt rather than an asset to the protocol” as it has operated without revenue.
Marcus Hardt, CEO of Balancer Labs, added that it was spending too much to raise liquidity relative to the revenue the protocol generates, a strategy that came at the cost of diluting Balancer (BAL) token holders.
Source: Marcus Hardt
Balancer was one of the most notable DeFi protocols during the 2020-2021 bull market, peaking at $3.3 billion in total value locked (TVL) in November 2021.
However, that figure dropped to $800 million by October 2025, with the hack leading to another $500 million TVL drop over the next two weeks. Balancer’s TVL has since fallen to $158 million, demonstrating how challenging it is for DeFi protocols to recover from large-scale hacks.
Martinelli said the November exploit “created real and ongoing legal exposure” and that maintaining a corporate entity that bears liability for past security incidents was not sustainable.
Balancer Labs executives outline a restructuring plan
Going forward, Hardt and Martinelli insist that Balancer’s future will be managed by the Balancer Foundation and the protocol’s decentralized autonomous organization.
Martinelli advocated for Balancer to follow a “leaner continuation path,” reducing BAL emissions to zero, restructuring costs to enable Balancer’s DAO to generate more revenue, reducing the team as much as possible and focusing on lower operating costs.
“Balancer still has real value to build from here. If we can make this transition work, we have a real chance to build a stronger and more sustainable protocol on the other side,” Hardt said.
Balancer DAO members have been asked to vote on two proposals that reflect potential changes to Balancer’s operational restructuring and BAL’s tokenomics.
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Despite the tokenomics issues, Martinelli noted that Balancer is “still generating real revenues” of more than $1 million over the past three months:
“That’s not nothing – that’s a functioning protocol buried under a broken tokenomics model and an overly burdensome cost structure,” he said.
“The problem is not that Balancer doesn’t work. The problem is that the economics around Balancer don’t work. Those can be solved.”
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