Balancer Labs Co-Founders: Balancer Labs to Sunset Gradually, Core Team to Join Balancer OpCo

Balancer Labs co-founder Fernando Martinelli has announced the firm will gradually shut down due to financial and legal risks following a major exploit. The decision aims to transition the protocol to a more sustainable, community-driven model. Core team members will move to Balancer OpCo under governance approval.

The protocol's total fee revenue over the past three months has reached an annualized rate of over $1 million, making it operationally viable. However, ongoing issues with tokenomics and high costs necessitate structural changes.

Proposed measures include halting BAL emissions, ending the veBAL model, and redirecting 100% of protocol fees to the DAO treasury. This is expected to streamline operations and reduce reliance on corporate oversight.

Why the Move Happened

The decision follows six months of legal and financial strain caused by a 2025 exploit, which drained $137.4 million from the protocol. The exploit exposed vulnerabilities in the v2 infrastructure and forced the company to reassess its structure.

Martinelli stated that maintaining a corporate entity under these conditions was no longer viable. The shutdown allows for a transition to a DAO-led model, reducing operational overhead and aligning costs with revenue.

The transition includes a BAL buyback program, enabling holders to exit at a set price. This mechanism aims to provide liquidity while supporting a restructured system. The DAO will now oversee key products such as reCLAMM, liquidity bootstrapping pools, and weighted pools.

The move is expected to increase transparency and decentralization. By eliminating external incentives and bribe dynamics, the DAO model seeks to create a more equitable governance structure.

What the Future Holds for Balancer Protocol

Balancer will focus on core products with high revenue potential while streamlining operations across blockchain networks. The V3 protocol fee split will be reduced to 25% to attract organic liquidity.

The protocol also plans to implement a buyback and burn program using treasury funds, potentially removing around 35% of the circulating supply. This aims to counter long-term dilution and strengthen token value.

Martinelli will not hold a formal role post-wind-down but may advise informally. This marks a strategic shift from a corporate-led model to a community-governed one, with an emphasis on long-term sustainability.