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Balancer Labs, the corporate entity behind the Balancer (BAL) decentralized exchange protocol, is winding down operations amid mounting legal exposure from last year’s $128 million exploit.
Co-founder Fernando Martinelli announced the decision in a governance forum post, calling the entity a liability rather than an asset for the protocol’s future.
The November 2025 exploit targeted vaults on Balancer’s version 2 (V2) protocol. Moreover, multiple vaults across Sonic, Polygon, and Base networks were also affected.
“The Nov 3 2025 v2 exploit created real and ongoing legal exposure. 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 wrote. “BLabs, as a corporate entity, has become a liability rather than an asset to the protocol’s future and is just not sustainable as is without any sources of revenue.”
Essential team members will transition into Balancer OpCo, pending a governance vote.
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BAL Tokenomics Overhaul and Focused Roadmap
Despite shutting down BLabs, Martinelli stopped short of calling for a full wind-down of the protocol. He noted that Balancer generated over $1 million in annualized fees over the last three months and argued the protocol itself still works. The problem lies in the economic model around it.
The proposed restructure targets several systemic issues. BAL emissions would drop to zero, ending what Martinelli described as a circular-bribe economy that costs more than it generates.
“The lean continuation path — cutting BAL emissions to zero, restructuring fees so the DAO actually captures revenue, reducing the team as much as possible, targeting much lower operating costs — is not a fantasy. That’s a real shot at a turn around, and the team has earned the chance to take it,” Martinelli added.
The veBAL governance model would also be wound down. All protocol fees would flow to the DAO treasury under the new model, with the v3 protocol share reduced to 25%. A BAL buyback would offer holders exit liquidity at a fair price, intended to clear the token overhang.
BAL traded near $0.15 as of late March, down over 99% from its 2021 all-time high of roughly $74.
The product roadmap would narrow to reCLAMM, Liquidity Bootstrapping Pools (LBPs), stablecoin and liquid staking token pools, weighted pools, and fewer EVM chains. Low-value deployments would be cut.
Martinelli revealed that he will have no formal role after BLabs dissolves, but offered to stay as an informal advisor. He described the next 12 months as the window for the remaining team to prove product-market fit and sustainability.
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