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Once worth $7 billion, the veteran DeFi project decides to shut down.

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Balancer Labs co-founder initiates 'orderly wind-down' proposal, as v3 fails to replace v2 revenue, and last year's $128 million exploit severely damaged its adoption. The protocol will gradually exit, with the treasury proposed to be returned to holders who burn BAL.

Original title: "The Once $7 Billion DeFi Veteran Decides to Shut Down"
Original author: Azuma, Odaily Planet Daily

Balancer, once a DeFi leader, is now preparing to cease operations.

On September 15, Marcus Hardt, co-founder of Balancer Labs, initiated a proposal on the protocol's governance forum, recommending an "Orderly Winddown" of the protocol — halting new business expansion, gradually converting liquidity pools to withdrawal-only, and ultimately shutting down the protocol.

This was not a sudden decision. As early as April this year, Balancer — still unable to shake off the shadow of last year's hack — had already passed a restructuring plan: halting BAL emissions, directing all protocol revenue to the DAO treasury, cutting operational costs, and reducing team size. The core goal of the restructuring was clear — to shrink Balancer to a scale where it could survive on its own revenue, and then bet on v3 for a comeback.

Several months later, Marcus, on behalf of Balancer, announced that this self-rescue effort had failed. This veteran DeFi protocol — with a peak TVL exceeding $2.4 billion and a token that once reached as high as $74.45 (corresponding to an FDV of over $7 billion) — could only make a quiet exit.

v3 Could Not Save Balancer's Fate

In this open letter explaining the shutdown decision, Marcus stated that the team had essentially completed the previously promised restructuring work.

Token emissions have stopped, veBAL's economic functions have been removed, all protocol fees now flow to the DAO, the operational budget has been cut by about one-third, and the team has been compressed to 12.5 full-time equivalent positions. On the product side, things have not stalled either — Balancer's Boosted Pools continue to operate, reCLAMM was launched after completing a security audit and renamed AutoRange Pools, and the team has continued to push external integrations and partnerships. Marcus revealed that some partnership negotiations had even reached advanced stages, with counterparties genuinely interested in certain capabilities of v3.

But the problem is that this interest ultimately did not translate into sufficient revenue.

Currently, most of Balancer's revenue still comes from v2, and the revenue growth of v3 has not reached the level of replacing v2. Marcus stated bluntly: "The product works, but it doesn't sell well enough."

If one were to delve into the main reasons Balancer has reached today's resolution, the exploit that occurred last November is undoubtedly an unavoidable issue.

Last November, Balancer suffered the most severe attack in the protocol's history. Hackers targeted Balancer v2's Composable Stable Pools, combining flash loans to exploit complex precision rounding errors and Vault accounting flaws, draining large amounts of staked tokens and stablecoins on the mainnet and multiple L2 chains, ultimately causing $128 million in exploit losses.

In this public letter, Marcus stated, although the incident has passed, he still underestimated the ongoing impact of this event on subsequent adoption rates. Every subsequent partnership discussion often had to start with explaining what happened in the exploit, what changes were made, and why v3 is different from the past. Although many partners accepted these explanations, it inevitably led to longer decision cycles and smaller partnership scales.

By August of this year, Marcus could no longer see a financing and revenue path that would allow v3 to continue developing according to the original plan. Therefore, Balancer chose to stop betting further.

This time, even the treasury is prepared to be distributed

According to the proposal details published by Marcus on the governance forum, if the proposal is passed, Balancer will not immediately "shut down," but will gradually exit according to a longer timeline.

First is October 30. At that time, pausable liquidity pools will be paused and switched to withdrawal-only mode; for pools whose contract mechanisms require entering Recovery Mode, corresponding processing will also be carried out; the remaining pools that allow adjustments will have protocol fees reduced to zero. At the same time, Balancer's bug bounty program will also end that day.

On October 31, the notice period for existing contributors ends. After that, Balancer will no longer carry out new business development, and the team size will be further reduced, retaining only a small transition team responsible for handling protocol exit, asset consolidation, and subsequent treasury distribution. The remaining operational budget previously approved under BIP-918, covering through the end of October, will also no longer continue as new operational funding, but will be used as shutdown budget, with unused portions ultimately returning to the treasury.

Starting in November, Balancer will enter a true "wind-down phase." The team will retain the minimal infrastructure needed to maintain the exit process and will gradually revoke low-risk permissions that are no longer needed between November and December 2026. Meanwhile, the DAO will begin consolidating assets and receivables scattered across different wallets, fee addresses, and other locations, completing the aggregation before the first round of distribution. If DAO assets such as code, licenses, and deployments are to be transferred, they will also require a separate Snapshot vote and will not automatically go to any party as part of this shutdown.

As for Balancer DAO's remaining treasury assets, they are set to be returned to BAL holders. The DAO treasury size disclosed in the current proposal is at least approximately $9 million. The previously approved BAL buyback plan will be canceled and replaced by a distribution mechanism of "burn BAL, claim treasury assets pro rata."

The proposal states that the first redemption window is expected to open by the end of May 2027 and last for 6 months. Eligible BAL holders who burn their BAL can claim treasury assets on a pro-rata basis; two subsequent distribution rounds will follow to handle remaining budgets during the shutdown period, assets received later, and unclaimed shares from the first round.

Finally, it will not be until the end of July 2028 that the protocol completes final liquidation, at which point treasury and distribution control will be revoked, and the relevant entities will be closed down one after another.

It should be noted that this "shutdown notice" is still only at the governance initiation stage. Balancer is expected to hold a Snapshot vote from September 25 to 29, and before the voting results are out, the protocol's current pools and withdrawal functions will not change. If the proposal does not pass, the existing operating framework will continue to be implemented.

After the business model fails, another ending for DeFi

From an industry perspective, Balancer's story is somewhat unusual. It did not announce its exit only after the product had already stopped being maintained and the community had completely disappeared. On the contrary, the team had just completed a fairly thorough round of cost cutting this year, also launched new products, and tried to rebuild revenue sources with v3.

But when these measures still could not generate sufficient revenue, continuing to maintain a protocol itself would also become a cost. The logic Marcus laid out in his open letter is also very direct—if there is no financing or growth path that can change the situation, then continuing to burn through the treasury will only lead to the same result later. Rather than continuing to put the remaining assets into a proven ineffective path, it is better to stop now and return the remaining value to token holders.

This may also be the more noteworthy aspect of Balancer's shutdown.

Early DeFi projects often relied on token incentives, liquidity mining, and continuously expanding TVL for growth, but as the industry enters a mature stage, protocols ultimately still need to answer a question inherent to traditional business models: whether the product can sustainably generate sufficient real revenue.

Balancer once attempted to actively save itself, but now it has chosen to proactively offer another answer—if the answer is negative in the long run, then an honorable exit can also become a governance option for a DAO.