Balancer co-founder Fernando Martinelli has announced the closure of BLabs following a recent security breach. He shared that the protocol will now focus on a simpler, more streamlined approach.
Balancer Labs is closing down, as announced by co-founder Fernando Martinelli in a message to the Balancer community.
He explained that the main reason for the decision was the potential legal issues stemming from a security breach expected in November 2025. He also stated that the company had become more of a problem than an asset.
Martinelli framed the shutdown as a step toward responsible stewardship of the protocol.
Why Balancer Labs Is Closing After the November Exploit
The November 3, 2025 v2 exploit triggered serious and ongoing legal exposure for Balancer Labs.
Martinelli pointed out that continuing to be responsible for that liability didn’t make sense as the project developed. The project had progressed to a point where it no longer needed to be run by a traditional company.
Currently, a combination of a decentralized autonomous organization (DAO), a foundation, and external service providers handle the project’s daily tasks. Martinelli believes this setup is the best way to move forward.
He confirmed that key BLabs team members will move to Balancer OpCo, pending a governance vote.
Marcus and Danko will present their plan for operations as a BIP, and Martinelli fully supports this approach.
Balancer co-founder Fernando Martinelli announced that Balancer Labs is closing down. This is mainly because of potential legal issues related to the security breach in November 2025, and the company hasn’t been able to generate enough revenue to continue operating as it is. The Balancer protocol will now be managed by a decentralized autonomous organization (DAO) and a foundation.
— Wu Blockchain (@WuBlockchain)
Balancer Protocol Still Generating Revenue Despite the Crisis
Despite calls for a complete shutdown, Martinelli ruled that option out.
His logic was simple: the system has earned over a million dollars in fees over the last three months, if that rate continues for a year.
He emphasized that the technology itself is still functional. However, he believes the real problem lies in the flawed financial model surrounding it.
Martinelli described the problem as a “fixable” one, not a fundamental failure.
He praised the dedication of contributors like Danielmk, Danko, Xeonus, Fabio, and Marcus, who remained committed even during the protocol’s most difficult period and came back with a solid plan for improvement.
A recent crypto hack led to the collapse of the USR stablecoin after attackers created 50 million new tokens without sufficient reserves to support them.
Tokenomics Overhaul and What Martinelli Supports
Martinelli laid out a clear set of changes he backs for the protocol’s restructure.
The first priority is eliminating emissions from BAL. He explained that these emissions reduce the value for those who hold the asset, and they’re funding a costly and ineffective system where money essentially goes around in a circle, costing more than it produces.
He also supports winding down veBAL.
He explained that the system was exploited by users such as Aura and Humpy, who used bribery to control the protocol’s governance. The protocol now requires a simpler governance structure.
Martinelli proposes sending all protocol fees directly to the DAO treasury. He also suggests lowering the V3 protocol share to 25% to encourage more natural growth of liquidity.
The current split, where the DAO captures just 17.5% of generated fees, is not sustainable.
The company’s repurchase of BAL shares also provided positive momentum. Martinelli characterized it as a fair opportunity for investors who wanted to sell their holdings.
People who support the new protocol are welcome to continue. He also wants the team to concentrate on key products like reCLAMM, LBPs, stablecoins, and LST pools, and to limit expanding to other blockchain networks.
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2026-03-24 10:24