Balancer is considering a shutdown after failing to rebuild durable revenue following last year’s exploit, according to a proposal posted to the project’s governance forum by Balancer Labs CEO Marcus Hardt.
Hardt called for a "phased sunset of the protocol" and said the measures taken after the 2025 hack to return the project to profitability "converted into sustained revenue growth." Under his plan, Balancer’s $9 million treasury would be distributed to BAL holders on a pro-rata basis.
Balancer said on X on September 14 that the proposal to wind down the protocol and distribute the treasury to BAL holders is live on the forum and was authored by Hardt. Discussion is open, and a Snapshot vote is expected from September 25 to September 29.
The project also said, "Nothing changes today: pools and withdrawals work as they do now."
From DeFi summer standout to shutdown debate
Balancer launched in time for the 2020 DeFi summer and stood out by expanding on the two-asset automated market maker model used by Uniswap and Bancor. It introduced multi-asset pools and custom pool weighting.
The protocol became successful in its own right and was widely forked. According to DeFiLlama data cited in the report, Balancer’s v2 code has been used in 27 protocols across multiple blockchains.
Balancer’s total value locked peaked at more than $3 billion in November 2021. It now stands at $58 million.
Security incidents built up, with last year’s exploit becoming the key blow
On its third iteration, Balancer’s v3 protocol was hit by a major exploit in November last year. Losses totaled almost $130 million, and the incident had knock-on effects across the sector.
The project had also gone through several smaller security incidents before and after that event. The latest came last month, when its original v1 codebase was exploited for more than $200,000.
At the time, Balancer said on X that it was aware of a bug in legacy Balancer v1 contracts that allowed LP funds to be drained. Those pools were deprecated and could not be paused. Users were urged to withdraw proportionally through a posted link, while the team said other Balancer products were unaffected.
Earlier, in September 2023, Balancer lost about $1.2 million from Boosted Pools across its Ethereum and Optimism deployments. DeFiLlama’s database also lists incidents from 2023 and 2020 that together account for another $1.3 million in losses.
What the proposal would do
Hardt’s plan is for an "orderly wind down." That would mean stripping back the DAO as much as possible and distributing treasury funds to BAL holders.
If carried through, all pools would move to withdrawal-only mode on October 30. The future of DAO-owned assets beyond the treasury would be left to another vote.
The proposal also brings forward a pending review of the recovery plan. Hardt said there was no reason to wait: "waiting for the calendar would change the numbers, not the conclusion, and every month of waiting is spent from the treasury."
In a separate post on X, he said the cost-cutting side of the recovery plan worked, but protocol revenue did not grow. He wrote that he had "underestimated how much the exploit would continue to limit adoption," which led to smaller amounts being deployed and hesitation from counterparties.
Hardt also praised the Balancer team, saying it kept v3 "safe," "usable" and "alive" during "the hardest year the protocol has had," despite operating as a smaller team and with less money.
Part of a wider run of closures
Protos said Balancer’s move comes as a number of other established DeFi projects have either shut down or made major pivots.
Last week, Harmony said it would shut down its blockchain in response to "threats posed by state actors and AI agents." The project said it would move operations to Ethereum and pivot toward becoming "the remix economy for AI video."
DEX aggregator Odos Protocol shut down in July, while real-world asset lending platform Goldfinch stopped operating the month before.
Outside DeFi, centralized exchange AscendEx announced in early July that it would cease operations, against a backdrop of concern over liquidity for pending user withdrawals. Just hours before the Protos report, CoinEx told users they had three months to withdraw assets and warned that it would begin charging a 5% monthly custody fee from December 22.