TLDR
- Balancer is moving toward shutting down its decentralized finance protocol following unsuccessful attempts to restore revenue
- The platform’s CEO Marcus Hardt attributes ongoing challenges to the lingering effects of a $128 million security breach in November 2025
- Protocol revenue has plummeted from $1.13 million in October 2025 to a mere $56,781 by August 2026
- BAL token holders stand to receive a portion of the remaining treasury, which exceeds $9 million
- The community will vote on the shutdown proposal between September 25 and 29
Balancer, an automated market maker and decentralized exchange platform, is preparing to shut down operations after attempts to revive the protocol following a major security incident proved financially unsustainable.
Balancer Labs CEO Marcus Hardt authored the shutdown proposal, which was published on the project’s governance forum earlier this week. The plan outlines a structured wind-down process and proposes distributing over $9 million from the protocol’s treasury among BAL token holders.
Protocol Revenue Collapses Following Security Incident
Balancer’s financial difficulties trace back to November 2025, when attackers exploited the platform’s v2 composable stable pools, draining $128 million. The immediate impact was severe: monthly revenue plunged from $1.13 million in October 2025 to $371,000 the month after the attack.
The downward trajectory persisted throughout 2026. Data from DefiLlama shows that by August, the protocol was generating only $56,781 in monthly revenue.
In March 2026, Balancer Labs ceased operations. Leadership attempted to sustain the protocol with a streamlined operational model, banking on a new version to reignite user growth.
While Hardt noted that the restructuring successfully reduced expenses and fulfilled commitments to token holders, revenue generation remained critically weak.
“The bulk of protocol revenue continues to originate from v2, while v3 revenue hasn’t expanded sufficiently to compensate. The product functioned as designed. We simply couldn’t generate adequate sales,” Hardt explained in a statement on X.
He further admitted to miscalculating the persistent reputational damage caused by the exploit. “The November 2025 security breach affected legacy v2 pools. Although v3 utilizes an entirely different architecture, the incident has shadowed the Balancer name in every discussion since, significantly hampering our ability to gain momentum,” he wrote on the governance platform.
Details of the Proposed Shutdown Process
According to the proposal, Balancer would initiate a gradual shutdown starting next month. All new business development activities would cease immediately, and liquidity providers would have until October 30 to prepare for withdrawal.
Pools with pause functionality would transition to a withdrawal-only state. Pools lacking this capability would continue operating, though protocol fees would be eliminated wherever technically feasible.
Beginning November 1, Balancer would maintain only essential infrastructure required to facilitate user withdrawals. The DAO would be dissolved, with a skeleton crew overseeing the transition period. The proposal allocates up to $400,000 to cover shutdown-related expenses.
Treasury assets would be distributed to BAL holders proportionally based on their holdings. The initial distribution is planned for May 2027, when token holders would burn their BAL in exchange for their allocated share. A subsequent distribution would return any remaining wind-down funds, with a final sweep occurring six months thereafter.
Hardt emphasized that delaying the decision would merely deplete the treasury without altering the inevitable conclusion.
The governance vote is set to occur between September 25 and 29. Should the proposal be rejected, Balancer would continue operating under its existing framework.
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