The DeFi protocol will remain active, although without the support of the Balancer Labs corporation.
“Balancer Labs has become more of a liability than an asset,” says its founder.
Balancer Labs, the company that created the decentralized finance (DeFi) protocol Balancer, will close its operations after failing to recover after the exploit suffered in November 2025.
The news was known yesterday, March 23, through a publication by Fernando Martinelli, co-founder of Balancer, in which he made it clear that The decision responds to both the financial wear and the legal impact and accumulated reputation.
“Balancer Labs has become a liability rather than an asset for the future of the protocol,” said the founder.
He also noted that the corporate structure “is simply not sustainable as it is, without any source of income.”
The hardest blow came on November 3, 2025, when Balancer suffered an attack that drained funds worth an estimated between $120 and $128 million, in what was the worst hack in its history, as reported by CriptoNoticias.
This attack affected pools and vaults of version 2 of the protocol and compromised tokenized versions of ether (ETH)Ethereum’s native cryptocurrency, such as WETH, osETH, wstETH, stablecoins and other ERC-20 tokens.
At that time, the team publicly confirmed “a possible exploit impacting Balancer V2 pools” and assured that its engineering and security teams were investigating “with a high priority.”
According to the subsequent explanation, the attack was linked to a vulnerability in the permissions and validation of certain internal operations of the protocol, which allowed unauthorized withdrawals from smart contracts.
Despite the closure of Balancer Labs, the protocol will not disappear. The founder stressed that the platform has already evolved “far beyond the point where it needs a traditional company on top” and maintained that Balancer operates through Decentralized Autonomous Organization (DAO), Foundation and a service provider model.
In that transition, some of the core team would be absorbed into a new operating structure, Balancer OpCo, still subject to governance approval.
The founder clarified that he evaluated even a total closure of the project, but ruled out that route because the protocol still generates real income. “In the last three months, Balancer generated over a million dollars annualized in total commissions,” he explained.
In his opinion, the problem is not that the protocol does not work, but that “the economy around Balancer is not working.”
A model problem, not just a security problem
In his message, the creator of Balancer defended a roadmap based on cuts and restructuring. Among the measures it supports, it mentioned end balancer (BAL) token issuancesredirect 100% of the protocol commissions to the DAO treasury and reduce the scope of the product to lower costs.
In turn, the plan is to dismantle veBAL, a token locking system that grants governance rights and rewards to users.
“What failed was not the technology. What failed was the economic model wrapped around it, and the accumulated weight of security incidents that eroded trust,” he wrote.
That diagnosis summarizes the underlying problem. That is, Martinelli clarifies that Balancer does not collapse because its infrastructure has stopped working, but because the combination of hacks, legal pressure, reputational deterioration and a misaligned cost structure It ended up making the company that supported it unviable.
The closure of Balancer Labs brings to the table a tension in the DeFi ecosystem: the difference between a protocol being able to continue functioning in a decentralized way and the company that incubated it is financially sustainable.
In this case, the DAO and the protocol infrastructure will remain in place. But the demise of Balancer Labs shows that, even in relevant projects in the sector, operational decentralization is not always enough.