Balancer Labs, the company that built the DeFi protocol Balancer, is winding down after severe financial pressure following a $116 million exploit in November. Founders and executives say the corporate entity has become a liability and that the protocol itself will continue in a much leaner form.
Founder Fernando Martinelli said he decided to dissolve Balancer Labs after a period of operating without meaningful revenue, calling the company a liability to the protocol. CEO Marcus Hardt added that the firm had been spending heavily to attract liquidity relative to the protocol’s income, a strategy that diluted BAL token holders and proved unsustainable.
Balancer was a leading protocol in the 2020–2021 DeFi boom, peaking at about $3.3 billion total value locked (TVL) in November 2021. By October 2025 TVL had fallen to around $800 million; the November exploit then triggered an additional roughly $500 million drop within two weeks. Balancer’s TVL now sits near $158 million, highlighting how difficult recovery can be after a large security incident. Martinelli also cited ongoing legal exposure from the exploit as a key reason to remove the corporate entity that might carry liability for past incidents.
Executives propose that the protocol be operated going forward by the Balancer Foundation and the protocol’s decentralized autonomous organization (DAO). They advocate a lean continuation plan that would stop BAL emissions, restructure fees so the DAO captures a larger share of revenue, slim the team to essential roles, and aim for substantially lower operating costs.
Hardt argued Balancer still has real value to build from and that a successful transition could produce a stronger, more sustainable project. DAO members are being asked to vote on two proposals covering operational restructuring and a revamp of BAL tokenomics.
Despite tokenomics challenges, Martinelli pointed out the protocol has generated real revenue—more than $1 million over the past three months—framing the issue as economic rather than technical: Balancer’s core infrastructure works, but the economic model and cost structure need fixing.