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Balancer Protocol became the next high-profile crypto project to bite the dust.
Which crypto firm is shutting down?
It was one of DeFi’s earliest automated market makers (AMMs) and was launched in 2020 on Ethereum. It allowed users to create customizable liquidity pools that function like self-balancing crypto index funds.
Its innovation lay in programmable liquidity, or pools that can hold multiple tokens with dynamic weights. The V2 upgrade introduced a unified vault system, improving efficiency but also increasing composability, a feature that ultimately became their vulnerability.
Despite securing over $450 million in total value locked, Balancer has now become a case study in how complexity can backfire.
The $116M exploit that changed everything
The turning point came on Nov. 3, 2025.
Balancer suffered a $116 million exploit, one of the largest DeFi hacks of the year. Attackers exploited a flaw in its V2 vault architecture, manipulating smart contract interactions to execute unauthorized transactions.
In simple terms, the attacker found a way to:
The composable nature of Balancer, where pools interact deeply, amplified the damage. Within minutes, funds were siphoned into fresh wallets, making recovery nearly impossible.
While no private keys were compromised, the hack exposed a deeper issue of design-level risk in complex DeFi systems.
Co-founder calls shutdown, but not the end
In a candid post on March 24, co-founder Fernando Martinelli confirmed he has decided to wind down Balancer Labs, the original entity behind the protocol.
He cited legal exposure from the exploit, lack of sustainable revenue, and the burden of maintaining a corporate structure tied to past incidents. But he was clear that this is not a call to kill the protocol itself,
Instead, Martinelli framed it as a structural reset, where the DAO and foundation would take over development, core team members would transition into a new operational structure, and the protocol would continue operating, still generating over $1 million in annualized fees.
CEO signals pivot just a day before
Interestingly, the tone just a day earlier was more optimistic.
CEO Marcus Hardt outlined governance proposals on X aimed at radically restructuring the protocol’s economics:
Hardt admitted the protocol had been overspending to attract liquidity, diluting token holders in the process.
TheStreet Roundtable reached out to Balancer for comments and had not received a response by the time of publication.
This article has been published in thestreet.com via Yahoo News.
Major crypto firm announces shutdown after $116M hack
Crypto hacks are shaping the fate of even the most promising DeFi projects. In just half of 2025 alone, over $2.17 billion was lost to exploits, eroding user trust and exposing vulnerabilities in complex smart contract systems. Now another project has succumbed to an exploit. ...
finance.yahoo.com
