Balancer co-founder Fernando Martinelli said Balancer Labs will shut down, ending the corporate entity that incubated and funded the decentralized exchange protocol. In a governance forum post, he wrote that BLabs had become a liability rather than an asset to the protocol's future and could no longer operate in its current form without revenue sources.
The move comes about five months after the November 2025 v2 exploit that drained roughly $110 million in digital assets, including osETH, WETH, and wstETH. It was the project's third known security incident, and Martinelli said the legal exposure created by that attack was a central reason for winding down BLabs.
From a DeFi heavyweight to a much smaller footprint
Balancer was one of the best-known names of the DeFi boom. At its late-2021 peak, the protocol held close to $3.5 billion in total value locked, placing it alongside Aave, Uniswap, and Curve as core infrastructure for decentralized trading. DeFiLlama data cited in the report shows TVL at $2.96 billion in October 2021, while annualized fees had climbed above $6 million.
Those figures have contracted sharply. TVL now stands at about $157 million, a 95% decline from the peak. Market capitalization has fallen to $10 million, and BAL was listed at $0.16 against a fully diluted valuation of around $11 million. The report also said BAL traded at $0.72 on Tuesday morning, about 88% below its all-time high.
Revenue remains, but not enough for the current structure
Martinelli said he seriously considered shutting everything down, yet stopped short of advocating a full wind-down because the protocol still generates fees. Over the past three months, Balancer produced more than $1 million in annualized fees. That is not enough to support the current setup, but he argued it can sustain a much leaner operation.
Under the restructuring plan proposed by the remaining team, BAL emissions would be cut to zero. Martinelli described the existing design as a circular bribe economy that costs more than it generates. The veBAL governance model would also be wound down after, in his view, being captured by meta-governance protocols such as Aura and by bribe markets that made voting unrepresentative of Balancer's front line.
DAO treasury would take all protocol revenue
The proposal would also reshape fee distribution. The DAO treasury would capture 100% of protocol revenue, replacing the current 17.5% share. At the same time, the v3 protocol share would be reduced to 25% in an attempt to attract organic liquidity. A BAL buyback is also part of the plan, intended to offer token holders exit liquidity at what Martinelli called a fair price.
He framed the choice in direct terms: those who believe in the restructured Balancer can stay, and those who do not can exit on fair terms. The proposal is aimed at removing the overhang hanging over the protocol.
Lean team, narrower product scope
If governance approves the transition, essential BLabs team members would move into Balancer OpCo. Martinelli said he will have no formal relationship with the protocol after the wind-down, though he offered to stay involved as an advisor.
The product roadmap would narrow to five areas: reCLAMM pools, liquidity bootstrapping pools, stablecoin and liquid staking token pools, weighted pools, and expansion to non-EVM chains. Everything outside those categories would be cut.