Balancer Labs, the development team behind the decentralized finance protocol Balancer, is shutting down following mounting financial pressure and a $116 million hack in November. Founder Fernando Martinelli announced the decision on Monday, stating that the company had become a liability rather than an asset to the protocol. He cited the absence of revenue as a central factor in the closure.
Balancer Labs CEO Marcus Hardt explained that the organization was spending disproportionately to attract liquidity relative to the revenue the protocol was generating. This approach came at the expense of diluting holders of the BAL token. The combination of high operational costs and weak income made the current structure unsustainable.
Balancer was among the more prominent DeFi protocols during the 2020–2021 bull market, reaching a peak of $3.3 billion in total value locked in November 2021. By October 2025, that figure had declined to $800 million. The November hack then triggered a further $500 million drop in total value locked over the following two weeks, bringing the current figure down to $158 million.
Martinelli said the November exploit created ongoing legal exposure and that maintaining a corporate entity carrying liability from past security incidents was no longer viable. He added that despite these challenges, Balancer is still generating over $1 million in revenue across the past three months. In his view, the protocol remains functional but is weighed down by a flawed tokenomics model and excessive costs.
Looking ahead, both Hardt and Martinelli are advocating for Balancer’s future to be managed by the Balancer Foundation and the protocol’s decentralized autonomous organization, known as the Balancer DAO. Martinelli described this as a lean continuation path, which would involve cutting BAL emissions to zero and restructuring fees so the DAO can capture more revenue. The plan also calls for reducing the team size and lowering overall operating costs.
Hardt expressed cautious optimism about the transition, stating that Balancer still has real value to build from and that a successful restructuring could result in a stronger and more sustainable protocol. Balancer DAO members have been asked to vote on two proposals addressing changes to the protocol’s operational structure and BAL’s tokenomics. The outcome of those votes will shape the direction of the project going forward.
Originally reported by CoinTelegraph.
