Balancer Labs to Wind Down as Protocol Shifts Toward DAO-Led Structure

• Balancer Labs, the corporate entity behind the Balancer protocol, is winding down due to legal liabilities and unsustainable operating costs.
• The decision follows a $116 million exploit in November 2025 that caused Total Value Locked (TVL) to plummet from $800 million to approximately $158 million.
• New governance proposals suggest cutting BAL emissions to zero, phasing out veBAL, and directing 100% of protocol fees to the DAO treasury.

Balancer Labs, the original development firm behind the Balancer automated market maker (AMM), has announced it will shut its doors following months of financial and legal pressure. Co-founder Fernando Martinelli revealed the decision on Monday, characterizing the corporate entity as a “liability rather than an asset” to the protocol’s future. The move marks a definitive shift toward a fully decentralized structure, with management duties transitioning to the Balancer Foundation and the Balancer DAO.

The wind-down is the culmination of a difficult period for the veteran DeFi project. In November 2025, Balancer suffered a $116 million exploit targeting its V2 composable stable pools. The hack not only drained a significant portion of the protocol’s liquidity but also created ongoing legal exposure for the Labs entity. Since the incident, Balancer’s Total Value Locked (TVL) has cratered by over 80%, falling from $800 million in October to roughly $158 million today.

CEO Marcus Hardt noted that the company’s traditional business model had become untenable. The firm was reportedly spending heavily to attract liquidity, a strategy that led to lackluster returns and the dilution of BAL token holders. “The problem isn’t that Balancer doesn’t work,” Hardt stated. “The problem is that the economics around Balancer aren’t working. Those are fixable.” Despite the corporate closure, the protocol generated over $1 million in annualized fees over the last quarter, which the team views as a sign of underlying viability.

To ensure the protocol’s survival, the team has introduced two sweeping governance proposals aimed at a “lean continuation path.” If approved, the restructuring will halt all BAL token emissions immediately and phase out the veBAL (vote-escrowed BAL) mechanism. Additionally, 100% of protocol fees would be routed directly to the DAO treasury, a significant increase from the previous 17.5% share. To mitigate the impact on investors, a buyback and burn program funded by up to $3.6 million from the treasury has been proposed to provide exit liquidity.

Operational costs are expected to drop by approximately 34%, with the core team shrinking from 25 to roughly 12.5 full-time contributors. These remaining developers will be integrated into Balancer OpCo, a leaner operating entity under the DAO’s control. While the BAL token price has remained relatively stable following the announcement, the community now faces a critical vote that will determine if the protocol can successfully navigate this radical reset.

“Maintaining a corporate entity that carries the liability of past security incidents, while the protocol itself needs to move forward unburdened, is not responsible stewardship,” Martinelli wrote in the announcement.

Disclaimer: This article is for informational purposes only and does not constitute advice of any kind. Readers should conduct their own research before making any decisions.