SKN | Balancer Labs Shuts Down After $116M Hack as DAO Takes Control of Protocol Future

Key Points

• Balancer Labs is shutting down following financial strain and a $116 million exploit.
• The Balancer protocol will continue under the Balancer Foundation and DAO governance.
• Executives propose a leaner structure with reduced costs and revised tokenomics.

Balancer Labs has announced it will shut down operations after struggling with financial sustainability and the aftermath of a major $116 million exploit in November.

Founder Fernando Martinelli stated that the entity had become a liability rather than a support system for the protocol, particularly as it continued operating without consistent revenue. The lingering legal and financial risks tied to the exploit further complicated its viability.

Protocol to Continue Under DAO Structure

Despite the closure of its core development entity, the Balancer Protocol itself will continue operating. Leadership is proposing a transition toward governance by the Balancer Foundation alongside its decentralized autonomous organization (DAO).

This shift reflects a broader trend in decentralized finance, where protocols increasingly move toward community-led governance models to reduce centralized overhead and liability.

Hack and Declining TVL Weigh Heavily

Balancer was once a leading player in the DeFi ecosystem, reaching a peak total value locked (TVL) of $3.3 billion during the 2021 bull market. However, the platform has seen a sharp decline in usage and capital over time.

By late 2025, TVL had dropped significantly, and the November exploit triggered an additional steep outflow of funds. Current levels sit far below previous highs, highlighting the long-term impact of security breaches on user trust and liquidity.

Restructuring Plan Targets Sustainability

Executives, including CEO Marcus Hardt, have outlined a restructuring strategy aimed at making the protocol sustainable. Key proposals include reducing operating costs, cutting token emissions to zero and adjusting fee structures to allow the DAO to capture more revenue.

The goal is to create a leaner system that can function efficiently without the burden of a large centralized team or excessive liquidity incentives that dilute token value.

A Second Chance for the Protocol

While Balancer Labs is shutting down, the protocol itself still generates measurable revenue, indicating that core functionality remains intact. Leadership believes that with improved tokenomics and governance, Balancer can rebuild and compete in the evolving DeFi landscape.

The success of this transition will depend on community support and the DAO’s ability to implement effective reforms. If successful, Balancer could emerge as a leaner, more resilient protocol — but the path forward remains uncertain.