- Balancer Labs, the for-profit company behind the Balancer DEX, is shutting down, CEO Fernando Martinelli announced Monday.
- The shutdown decision stems from legal liability created by a November exploit that drained approximately $128 million from the protocol.
- The underlying Balancer DAO will continue operating, with key changes like stopping new BAL token emissions and routing all fees to the treasury for buybacks.
Balancer Labs is ceasing operations, its CEO and co-founder announced Monday on the protocol’s governance forum, citing severe legal risks following a major hack. The for-profit entity behind the popular decentralized exchange and automated market maker is shutting down as a direct result of “real and ongoing legal exposure” from the $128 million exploit in November.
However, this is not the end for the Balancer protocol. Balancer DAO, the token-holder collective, and the Balancer Foundation will continue their work. Fernando Martinelli outlined a plan for the protocol’s survival, stating, “The next 12 months will be crucial for the team to prove this possible.”
Consequently, Martinelli explained the corporate entity had become a liability, as it offered no revenue to offset its risks. Essential team members may be moved to a new entity called Balancer OpCo, subject to a governance vote, while Martinelli himself will step back from any formal role.
Meanwhile, the protocol will undergo a significant restructuring to financially realign with its community. New emissions of the BAL token will stop completely, and all generated fees will be used for buybacks. This gives token holders what Martinelli calls a “fair exit” if they no longer believe in the project’s future.
This news fits a broader trend, as multiple DeFi projects have shuttered recently, including Tally, Step Finance, and Parsec. The November attack caused investors to flee, cratering the protocol’s deposits from $775 million to just $154 million by late March.
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