Shut-downs, layoffs, hacks, and other similar incidents are becoming familiar terms for the crypto/blockchain industry. Adding to the pain comes the upcoming shutdown of Balancer Labs, the parent company of the Balancer DeFi protocol.
The November 2025 hack drains the energy of Balancer Labs
Remember the Balancer DeFi protocol hack in early November 2025? Hackers moved more than $70 million in crypto funds from its V2 Composable Stable Pools. With support from StakeWise, a liquidity-staking platform, Balancer somehow recovered $19.3 million in crypto assets.
However, the repercussions of this hack still linger at Balancer, as co-founder Fernando Martinelli announced the company will shut down, citing the hack as one of the core reasons.
Martinelli expands the reasons, saying the hack has brought legal exposure for the platform, meaning several affected users might sue Balancer Labs, regulators could question the platform, and be forced to deal with investigations.
Unsustainable revenue impacts Balancer Labs
One thing worth noting is that Balancer Labs is a central entity, while Balancer DeFi is completely decentralized.
So, even if a hack hits decentralized platforms, their centralized entities can still be held accountable, as they are the ones who designed, executed, and promoted the system. In other words, regulators typically hold the parent company responsible.
Now, coming back to other reasons affecting the shutdown, they include lack of sustainable revenue for Balancer Labs. The platform was not earning sufficient revenue to survive long-term.
Most of the value in DeFi goes to liquidity providers and for incentives in BAL tokens (Balancer’s native token). For token incentives, the protocol has to emit more BAL tokens, which is quite expensive. And, the company captured very little of the revenue.
Importantly, operational costs struck the firm badly. Expenses for operations, development, compliance, and more did not exactly leave Balancer in high spirits.
Complete shutdown isn’t the answer; full decentralization is a priority
As mentioned, it is time for Blancer Labs to bid farewell. However, Blancer DeFi/DEX (decentralized exchange) will continue to exist in a complete decentrlaized ecosystem.
For the new restructured process, co-founder Fernando Martinelli backs a major rest of the platform’s tokenomics. The current structure is a ‘circular bribe economy’ in his words.
- No more BAL emissions — There will be no more token incentives through BAL tokens.
- No veBAL model — vote-escrowed BAL is a system that allows users to lock their BAL tokens for some time, for which they will get veBAL. It gives users voting power on where rewards go.
- Complete revenue goes to the DAO — Earlier, fees were scattered across different places like liquidity providers, veBAL voters, incentives, and more. In the new structure, 100% fees will move to the DAO treasury (decentralized autonomous organization).
- BAL buyback — BAL token holders are facing a crisis due to BAL model uncertainty and the BAL emission decline. In the buyback, protocol will use its revenue to buy BAL tokens from the market, which will help long-term holders to exit/sell their positions without crashing the price.
- Focusing less on products — Fewer products and chains means the company can double down on core services like stablecoin pools, liquid staking tokens, and liquid bootstrapping pools.
In essence, the Balancer co-founder finds that some of its structures are redundant as they don’t produce any revenue for the firm. He puts his words as follows: “The problem isn’t that Balancer doesn’t work. The problem is that the economics around Balancer aren’t working.”
To put it plainly, the technology is perfect, but the way the money side is set up is not.
