The for-profit entity Balancer Labs is shutting down, its co-founder announced, citing significant legal liability stemming from a $128 million exploit in November. While the Balancer decentralized exchange protocol will continue under its DAO and Foundation, the firm’s closure reflects a broader trend of DeFi project shutdowns. Essential team members may transition to a new entity, Balancer OpCo, pending a governance vote, with the protocol halting new BAL token emissions and directing all fees to buyback existing tokens.
Balancer Labs, the corporate entity behind the Balancer exchange, is shutting down. Its CEO and co-founder, Fernando Martinelli, announced the decision, attributing it to a major exploit in November.
That incident saw attackers drain around $128 million from users. Martinelli stated the hack “created real and ongoing legal exposure” for the firm. He concluded “Balancer Labs, as a corporate entity, has become a liability rather than an asset to the protocol’s future.”
The Balancer protocol itself will continue operating under its DAO and Foundation. This follows a wave of shutdowns impacting other DeFi projects like Tally, Step Finance, and Parsec. Many cited funding challenges and market misalignment.
The November exploit was described by security firm BlockSec as “a highly sophisticated exploit.” It caused a sharp decline in the protocol’s deposits from $775 million before the hack to around $154 million recently.
Martinelli said he considered ending support entirely but noted the protocol still generates revenue. “Over the last three months, Balancer generated over $1 million in total fees annualised,” he said. Essential team members may join a new entity called Balancer OpCo after a vote.
New emissions of BAL tokens will cease, and all protocol fees will be routed to the DAO treasury. Those funds will be used to buy back BAL tokens on the open market. Martinelli framed this as offering a fair exit for skeptical holders while clearing an investment overhang.
