Balancer Labs, the team behind the Balancer decentralized finance protocol, is shutting down after mounting financial pressures and a $116 million hack in November, with management proposing to continue the protocol under a simpler, more profitable structure.
“After careful consideration, I have decided to close Balancer Labs. This is not a decision I will make lightly,” one of the founders of Balancer Protocol, Fernando Martinelli, he said on Monday, adding that Balancer Labs had become “a liability rather than an asset to the protocol” because it was operating without revenue.
Balancer Labs CEO Marcus Hardt in addition that it was spending too much to attract liquidity relative to the revenue generated by the protocol, a strategy that came at the cost of diluting Balancer (BAL) token holders.
Balancer was one of the more notable DeFi protocols during the 2020-2021 bull market, reaching peak total value locked (TVL) of $3.3 billion as of November 2021.
However, by October 2025, this number had dropped to $800 million, and the hack led to another $500 million drop in TVL over the next two weeks. Balancer’s TVL has since dropped to $158 million, which shows how tough it is for DeFi protocols recover from large-scale intrusions.
Martinelli said the November exploit “caused real and continuing legal exposure” and that keeping a corporate entity liable for past security incidents was unsustainable.
Balancer Labs management presents a restructuring plan
Going forward, Hardt and Martinelli insist that Balancer’s future will be managed by the Balancer Foundation and a decentralized autonomous protocol organization.
Martinelli advocated for Balancer to adopt a more “lean continuation path,” which includes reducing BAL emissions to zero and restructuring fees to enable Balancer’s DAO to earn more revenue, reduce its team as much as possible, and lower operating costs.
“Balancer still has real value to build. If we can make this transition successful, we have a real chance of building a stronger and more balanced protocol on the other side,” Hardt said.
Balancer DAO members were asked to vote on two proposals reflecting possible changes to Balancer’s operation restructuring and BAL tokenomics.
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Despite the tokenomic issues, Martinelli noted that Balancer “continues to generate real revenue” of over $1 million over the past three months:
“It’s not nothing — it’s a functioning protocol hidden behind a broken tokenomic model and an exaggerated cost structure,” he said.
“The problem isn’t that Balancer doesn’t work. The problem is that the economics around Balancer don’t work. It can be fixed.”
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