Balancer Labs closes, protocol to continue
Balancer Labs, the team behind decentralized financial protocol Balancer, is shutting down after financial strain and a $116 million hack in November.
“After careful consideration, I have decided to terminate Balance Labs. This is not a decision I take lightly,” Balance Protocol co-founder Fernando Martinelli said on Monday, adding that Balance Labs has become “a liability rather than an asset to the protocol” as it operates without revenue.
Balance Labs CEO Markus Hardt added that the protocol was spending too much to attract liquidity relative to its revenue, a strategy at the expense of diluting Balance (BAL) token holders.
Balance was one of the most popular DeFi protocols during the 2020–2021 bull market, reaching $3.3 billion in total value locked (TVL) in November 2021.
However, this figure dropped to $800 million in October 2025, a hack that caused another $500 million drop in TVL over the next two weeks. Balance's TVL has since fallen to $158 million, showing 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 corporation responsible for past security issues is unsustainable.
Balance Labs executives outline the structure plan
Moving forward, Hardt and Martinelli are pushing for Balancer's future to be managed by the Balancer Foundation and its protocol, a decentralized independent organization.
Martinelli advocated for Balancer to follow a more “lean path forward,” which would include reducing BAL emissions to zero, structuring fees to allow Balancer's DAO to retain more revenue, shrinking its team as much as possible and aiming for lower operating costs.
“Balancer still has real value to build from here. If we can make this transition, we have a real opportunity to build a strong and sustainable protocol on the other side,” said Hardt.
Balancer DAO members have been asked to vote on two proposals that reflect potential changes to Balancer's operations and BAL tokenomics.
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Despite the Tokinomics issues, Martinelli said Balancer is “still generating real revenue” over $1 million in the past three months.
“That's okay – it's a working protocol buried in a broken Tokinomics model and an overburdened cost structure,” he said.
“The problem isn't that the balancer doesn't work. The problem is that the economics around the balancer don't work. Those are fixable.”
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