The company that built decentralized finance (DeFi) powerhouse Balancer is closing.
Balancer co-founder Fernando Martinelli announced on Tuesday that Balancer Labs, the corporate entity that incubated and funded the decentralized exchange protocol, will close.
The decision comes roughly five months after a v2 exploit in November 2025 that drained approximately $110 million in digital assets, as first reported by CoinDesk, including osETH, WETH, and wstETH, the third known security breach for the project and the one that created the legal exposure that Martinelli cited as the reason for shutting down BLabs.
“BLabs, as a corporate entity, has become a liability rather than an asset to the future of the protocol and is simply not sustainable as it is without any source of revenue,” Martinelli wrote in a governance forum post.
Martinelli added that he “seriously considered” closing everything completely. But he stopped short of asking for a full liquidation because the protocol still generates income.
Balancer was one of the names that defined the DeFi boom. At its peak in late 2021, the protocol had nearly $3.5 billion in total value locked, placing it alongside Aave, Uniswap, and Curve as critical infrastructure for decentralized commerce.
Data from DeFiLlama shows that the TVL was $2.96 billion in October 2021, with fees exceeding $6 million annualized. But the TVL now stands at $157 million, a 95% drop from the peak.
The market capitalization has fallen to $10 million. BAL is trading at $0.16 against a fully diluted valuation of $11 million, meaning it is trading well below net asset value.
Balancer generated more than $1 million in annualized fees over the past three months. That is not enough to sustain the current operation, but it is enough to sustain a much more efficient one.
The restructuring plan proposed by the remaining team is aggressive. BAL emissions would be reduced to zero, ending what Martinelli described as a “circular economy of bribery that costs more than it generates.”
The veBAL governance model, which he said was captured by meta-governance protocols like Aura and bribery markets that made voting “not representative of the actual Balancer frontline,” would be eliminated.
Protocol fees would be restructured so that the DAO treasury captures 100% of the revenue instead of the current 17.5%. The v3 protocol stake would drop to 25% to attract organic liquidity. And a BAL buyback would offer holders exit liquidity at a fair price.
“If you believe in the restructured Balancer, you stay. If you don’t, you get a fair exit,” Martinelli wrote. “That’s honest dealing and clears up the excess.”
Essential members of the BLabs team would be absorbed into Balancer OpCo pending a governance vote. Martinelli himself will have no formal relationship with the protocol after the liquidation, but has offered to act as an advisor.
The product scope is being narrowed to five areas where the team sees differentiation: reCLAMM pools, liquidity bootstrap pools, stablecoin pools and liquid staking tokens, weighted pools, and expansion to non-EVM chains. Everything else is cut.
BAL was trading at $0.72 on Tuesday morning, about 88% off its all-time high.
