The April restructuring had projected that the treasury could support operations for about 9 years. Five months later, Balancer released a proposal for an orderly shutdown protocol, planning to allocate the remaining assets to BAL holders.

By: ChandlerZ, Foresight News

On September 14, Marcus, a member of the treasury council of the decentralized trading protocol Balancer, submitted a proposal for orderly closure, recommending to cease new business expansion, gradually end the protocol's operations, and allocate remaining assets to holders of the governance token BAL. The treasury, currently managed by the asset management firm kpk, is estimated to have at least 9 million dollars at current prices. The proposal is still pending community voting.

Balancer launched in 2020, allowing users to deposit various tokens into liquidity pools according to set weights for traders to exchange and earn fees. In 2021, its locked asset scale was close to 3.5 billion dollars, which had dropped to about 157 million dollars by March this year. As of September 15, the scale recorded by DefiLlama is about 59.35 million dollars, a decrease of approximately 62.2% since March.

Monthly expenditure of 150,000 dollars; the protocol's revenue in August was only 30,000 dollars

According to the closure proposal, Balancer currently has a monthly expenditure of about 150,000 dollars, while the protocol's revenue in August was around 30,000 dollars, a decrease of about 69% from about 97,000 dollars in June, only accounting for 20% of monthly expenditure. Together with approximately 25,000 dollars in monthly investment income from the treasury, it is estimated that approximately 95,000 dollars of reserves are still needed each month.

In the nearly 30 days up to September 15, Balancer processed transactions worth about 266 million dollars, generating fees of approximately 216,800 dollars, of which about 61,200 dollars belonged to the protocol. During the same period, approximately 42.12 million dollars remained locked in Ethereum, accounting for about 71% of the total scale; Monad was locking about 7.48 million dollars but contributed about 129 million dollars in transaction volume during the same period, accounting for nearly 48.7% of the total transaction volume in 30 days.

In its semi-annual report, kpk disclosed that the treasury it manages decreased from approximately 12.357 million dollars in January to about 7.729 million dollars in June, a reduction of about 37.5%. During this period, the treasury continued to provide funding for operations and paid 500,000 dollars in compensation to locked users whose yield-sharing was canceled, and the volatile assets it held also depreciated. Since April, kpk has waived management fees and performance commissions, and the investment strategy earned approximately 155,000 dollars in the first half of the year.

Marcus stated that most of the protocol's revenue still comes from the old version V2, and V3 has not generated sufficient income; some key personnel have already left or reduced their involvement. He believes that continuing expenditures under the operational plan that has been tried will only further deplete the assets available for distribution to token holders.

After the V2 hack, first close the company and then cut the budget

On November 3, 2025, a portion of the stablecoin pool in Balancer's V2 was attacked. The official report later stated that the attacker exploited a rounding error in the swap calculation to take assets from the pool with input lower than normally required. The differently structured V3 was not affected by this vulnerability.

By March 2026, co-founder Fernando Martinelli decided to close the original development company Balancer Labs. In a community statement, he mentioned that the company had no income but bore legal risks from the attack incident; the protocol planned for the core team to be taken over by a new operating entity, Balancer OpCo, to continue development and maintenance.

The restructuring plan BIP-918 passed in April reduced the team size by half, based on full-time work volume, from about 25 people to 12.5 people, and the annual budget was cut from about 2.87 million dollars to 1.9 million dollars. The concurrently passed BIP-919 halted the annual minting of about 3.78 million BAL and increased the share of protocol revenue received by the community treasury from 17.5% to 100%.

To attract liquidity providers, the share of protocol revenue extracted from transaction fees in V3 was reduced from 50% to 25%, with 75% retained by liquidity providers within the pool. At that time, BIP-919 estimated that the adjusted treasury's annual protocol revenue could reach about 1.22 million dollars, narrowing the annual operating gap to about 700,000 dollars; according to the treasury's size and income and expenditure calculations post-repurchase, it could still support operations for about 9 years under neutral scenarios.

V3 had previously launched Boosted Pools, which introduced yield-generating assets into trading pools; the team subsequently delivered AutoRange pools that automatically adjusted market-making ranges and continued to promote integration and cooperation. According to Marcus, these products were operating normally, but cooperation did not translate into sustained revenue growth, and the 2025 attack continued to impact new business negotiations.

Exit operations in October, allocation of treasury to start in May next year

If the proposal is approved, on October 30, the pauseable liquidity pools will transition to withdrawal-only status, with the bug bounty program ending on the same day. Pools that cannot be paused will continue to operate according to contract, and the protocol fees will be set to zero where allowed by the contract. Starting in November, the team will only maintain a simplified withdrawal interface, necessary data services, and operational documentation for users to exit the pools and unlock their funds.

The shutting down process intends to reserve up to 400,000 dollars: 150,000 dollars for work from November to May 2027, 30,000 dollars for subsequent distributions, and another 220,000 dollars as an emergency reserve, with any unspent portion returning to distribution assets. The original operational expenditure expected for September and October is about 300,000 dollars and will be paid according to the approved budget.

BAL holders originally had a repurchase arrangement based on the net asset value of the treasury, with a total cap of 35% of the treasury; the latest proposal intends to cancel this arrangement and instead allocate remaining assets after deducting closure costs. Holders will receive tokens proportional to their eligible BAL shares based on the actual treasury holdings, with the final asset list and quantities confirmed through snapshot and audit at the start of the first distribution round.

The first distribution is planned to begin at the end of May 2027 and end at the end of November, with burn of BAL during the claiming period. Waiting until next May is to allow all veBAL locks existing at the time of the proposal's release to expire. veBAL is the governance token obtained by locking BAL and wrapped Ether into pool shares, and holders must first unlock the pool shares before exiting to participate in the distribution.

Users who indirectly hold through auraBAL or sdBAL also need to convert to BAL according to the corresponding protocol arrangements during the claiming period. Permanently locked tetuBAL will be handled according to another rule: based on the number of holders and underlying BAL quantity at the proposal's release, the treasury will issue an amount of BAL equivalent to half the underlying quantity, which will then participate in the same round of distribution.

The second round is planned to take place by the end of January 2028, which will airdrop unused budget, later received assets, and unclaimed shares from the first round in proportion to addresses that claimed in the first round; the final distribution will be completed by the end of July 2028. Addresses that miss the first round will not have a share in the second round either.

Continued recovery of stolen funds; protocol code can be separately taken over

In August, Balancer, through BIP-923, extended the original 180-day claiming period for recovering stolen funds by another six months; at the time of submitting the proposal in July, approximately 920,000 dollars had yet to be claimed.

According to the closure plan, investigators and law enforcement will continue recovery efforts, and the recovered assets will belong to the liquidity providers of the affected pools, excluded from the treasury distribution to BAL holders. The foundation will continue to be responsible until its closure, and the subsequent assuming party will need to vote separately.

Marcus also revealed that contributors are preparing another proposal to continue the infrastructure under a new name. If the community-owned code, permissions, and deployments need to be transferred, each transaction will require a separate vote, with the proceeds entering the treasury; unassumed code will remain open source and documented.

The closure proposal is scheduled to be voted on from September 25 to 29 on the governance platform Snapshot. If it is not approved, the existing operational authorization, budget, and BAL repurchase plan will remain in effect.