Balancer Labs, the corporate entity behind the DeFi protocol Balancer, is winding down operations, co-founder Fernando Martinelli announced in a forum post on Monday. 

The decision follows a Nov. 3, 2025 exploit that affected Balancer v2 pools across multiple chains. The incident, which drained an estimated $128 million, was attributed to a rounding flaw in its swap logic that attackers exploited.

"The Nov 3 2025 v2 exploit created real and ongoing legal exposure," Martinelli wrote. "Maintaining a corporate entity that carries the liability of past security incidents, while the protocol itself needs to move forward unburdened, is not responsible stewardship."

Martinelli noted that Balancer Labs has become a liability rather than an asset to the protocol's future, as it operates without revenue. He added that the protocol has evolved to function through its DAO, foundation, and a service provider model without the need for a traditional corporate entity.

Core members of the Balancer Labs team are expected to transition to a new entity, Balancer OpCo, subject to a governance vote. 

Not a full shutdown

Martinelli stated that this is not a complete shutdown of the protocol. 

"I have considered whether the right answer is to shut everything down … The market signal is brutal," the co-founder said. "But here's what I keep coming back to: the protocol is still generating real revenue."

He pointed to recent performance metrics, saying that Balancer generated more than $1 million in annualized  fees, and argued the protocol remains functional despite an inefficient tokenomics model and cost structure.

"What failed was not the technology. What failed was the economic model wrapped around it, and the accumulated weight of security incidents that eroded the trust we built," Martinelli added.

Lean restructuring model

The Balancer co-founder expressed his support for a lean restructuring plan that includes ending Balancer token (BAL) emissions, winding down the veBAL governance model, and restructuring fees so the DAO treasury receives 100% of protocol fees, while reducing the V3 protocol share to 25%. 

Additional measures include implementing a BAL buyback to provide exit liquidity for holders and focusing development on core products such as reCLAMM, liquidity bootstrapping pools, stables, and LST pools, as well as weighted pools across fewer chains.

Formal proposals outlining the tokenomics restructuring and operational changes will be published separately by the core team.

Following the shutdown of Balancer Labs, Martinelli said he will no longer have a formal relationship with the protocol, but added that he remains a believer in Balancer's underlying technology and the remaining team.

"I believe Balancer still has a chance to turn things around and prove to token holders who stay that there can be product market fit and sustainability," Martinelli wrote. "The next 12 months will be crucial for the team to prove this possible."

Meanwhile, Balancer Labs CEO Marcus Hardt also commented on the development, writing on X that the past few months have been "extremely hard."

"Balancer still has real products," said Hardt. "Boosted pools are generating real usage. Our fungible concentrated liquidity solution is coming back stronger after the security work. And I believe the protocol still has room to build products and revenue streams that fit Balancer uniquely well."