Balancer considers winding down following $130M exploit

Balancer, once a prominent name in DeFi, is now contemplating shutting down.

Balancer Labs CEO Marcus Hardt has put forward a proposal on the project's governance forum recommending a "phased sunset of the protocol."

According to the post, all attempts to restore profitability after last year's hack have failed to "convert into sustained revenue growth."

Hardt's proposal calls for distributing Balancer's $9 million treasury pro-rata among BAL holders.

A proposal to wind down Balancer and distribute the treasury to BAL holders is live on the forum, authored by Marcus Hardt. Discussion is open; a Snapshot vote is expected to happen from 25 to 29 September.

Nothing changes today: pools and withdrawals work as they do now. Any…

— Balancer (@Balancer) September 14, 2026

The problem

Balancer launched in time for the 2020 "DeFi summer," building on the two-asset automated market maker model from Uniswap and Bancor to offer multi-asset pools and customizable pool weighting.

The project was successful and widely forked; DeFiLlama data shows its v2 code has been used in 27 protocols across several blockchains. Balancer's TVL hit a peak of over $3 billion in November 2021 but has since fallen to $58 million.

In November last year, Balancer's v3 protocol suffered a severe exploit that resulted in losses of nearly $130 million, sending ripples through the DeFi sector.

The project has also faced several other security incidents before and after. Last month, its original v1 codebase was exploited, losing more than $200,000.

We are aware of a bug found in legacy Balancer v1 contracts that allows draining LP funds. These pools are deprecated and non-pausable. Users are encouraged to withdraw proportionally via https://t.co/W9YXbyre0K. Other Balancer products are not affected.

— Balancer (@Balancer) August 31, 2026

Earlier, in September 2023, Balancer saw about $1.2 million lost through "Boosted Pools" on Ethereum and Optimism. DeFiLlama records additional incidents from 2023 and 2020, totaling another $1.3 million.

The proposal

Hardt is proposing an "orderly wind down," which involves scaling back the DAO significantly and distributing treasury funds to BAL holders.

Under the plan, all pools would be switched to withdrawal-only on October 30, and the DAO's other assets would be decided by a separate vote.

The proposal accelerates a scheduled review of the recovery plan. Hardt believes that "waiting for the calendar would change the numbers, not the conclusion, and every month of waiting is spent from the treasury."

Hardt elaborated in a post on X, stating that while the cost-cutting measures in the recovery plan succeeded, protocol revenue did not grow.

He acknowledged that he "underestimated how much the exploit would continue to limit adoption," resulting in lower amounts deployed and hesitation from counterparties.

Hardt also praised the Balancer team for keeping v3 "safe," "usable," and "alive" during what he called the "hardest year the protocol has had," while operating with a smaller team and reduced funding.

https://t.co/RqULwVdjh5

— Marcus | Balancer (@Marcus_Balancer) September 14, 2026

Shutdown season

Balancer's move follows a trend of other prominent DeFi projects either shutting down or pivoting significantly.

Harmony announced last week it would close its blockchain due to "threats posed by state actors and AI agents," moving to Ethereum and planning to become "the remix economy for AI video."

The DEX aggregator Odos Protocol ended operations in July, and the troubled real-world asset lender Goldfinch gave up the previous month.

In the centralized exchange space, AscendEx declared it would cease operations in early July, amid worries about liquidity for pending user withdrawals.

Hours earlier, CoinEx set a three-month deadline for users to withdraw assets, cautioning that a 5% monthly custody fee would apply from December 22.