Balancer Labs has closed due to financial issues following a major hack, with management proposing a shift to a DAO structure.
Balancer Labs has announced its closure due to ongoing financial struggles exacerbated by a $128 million hack in November. Co-founder Marcus Hardt expressed the challenges faced by the company, including tough decisions and the necessity to part ways with valued team members.
“The last few months have been incredibly tough... painful conversations about what was and what was no longer sustainable,” Hardt stated.
He highlighted that the firm had been overextending itself financially, with liquidity costs outpacing returns, leading to significant dilution of BAL token holders. Co-founder Fernando Martinelli remarked that the company had become more of a liability than a benefit, stating that maintaining the existing corporate structure was no longer viable due to ongoing legal risks stemming from the hack.
Future Plans
In light of these challenges, management has proposed transferring control of the Balancer protocol to the Balancer Foundation and a decentralized autonomous organization (DAO). Hardt indicated that while the infrastructure remains functional, the economic model requires urgent adjustments.
Proposed measures include:
- Halting BAL issuance entirely;
- Restructuring fees to enhance DAO revenue;
- Implementing team reductions to minimize operational costs.
“Balancer is still generating real revenue — over $1 million in the last three months... The problem is the economy surrounding it. This is fixable,” Martinelli emphasized.
DAO members are being urged to vote on two initiatives aimed at restructuring Balancer’s operations and tokenomics.
Impact of the Hack
Once a leading player in the DeFi space with a total value locked (TVL) of over $3.3 billion during the 2020-2021 bull market, Balancer's TVL dropped sharply to $800 million by October 2025. The November hack further precipitated a $500 million decline in locked value within two weeks, leaving the current TVL at $157.8 million.
The BAL token price has plummeted 99% since its peak in 2021, dropping from $72 to $0.15, while its market capitalization has fallen from $783 million to just $9 million. Additionally, the Balancer team has proposed a distribution of around $8 million to community members affected by the hack.
