Daily News 19

Tag: Governance vote

  • Balancer May Shut Down Before Its Treasury Runs Dry

    Balancer May Shut Down Before Its Treasury Runs Dry

    Balancer DAO Proposes Orderly Winddown as Monthly Costs Outpace Revenue

    A Balancer Treasury Council member has submitted a proposal for an orderly winddown of the protocol, subject to a governance vote by BAL holders. The plan would halt new development, reduce operations to a limited withdrawal service, and eventually distribute the remaining treasury assets to eligible BAL holders.

    Financial Reality Drives the Proposal

    The proposal rests on a straightforward calculation: Balancer is spending significantly more each month than the protocol and treasury management generate. Monthly operating costs run approximately $150,000, while August protocol revenue reached only about $30,000. Treasury management contributed roughly $25,000 per month, leaving a substantial deficit.

    Balancer had previously attempted to achieve profitability through cost reductions, a simplified token model, and growth in its newer v3 products. According to the proposal, those efforts did not create enough sustained revenue to replace the protocol’s older v2 income. The authors argue that a capped exit budget is preferable to allowing operating costs to continue without a clear path to profitability.

    Phased Transition Timeline

    No changes would take effect unless BAL holders approve the proposal via a Snapshot vote. If approved, Balancer would move through a structured exit period rather than shutting down immediately:

    • Before October 30, 2026: Liquidity providers (LPs) would have an exit window with access to withdrawal guidance.
    • From October 30, 2026: Pools that can be paused would move to withdrawals-only mode, and the bug-bounty program would end.
    • End of May 2027: The first proposed BAL treasury-redemption round would open.
    • End of November 2027: The six-month first-round redemption window would close.

    Balancer does not hold LP assets in the way a centralized exchange holds customer deposits. Users can withdraw through the smart contracts even if the organization stops maintaining its usual interface. Pools whose contracts cannot be paused could remain live, with protocol fees set to zero where the contracts permit it.

    Different Holder Groups Follow Different Routes

    The proposed distribution is not a single process for every Balancer user. Each group must consider its specific withdrawal or redemption path:

    Liquidity Providers

    Review the pool’s withdrawal route. Eligible pools could become withdrawals-only from October 30, while others may continue under different contract rules.

    Ordinary BAL Holders

    Follow the opening-snapshot announcement, then redeem during the proposed six-month first round by burning BAL for a pro-rata, in-kind share of the treasury.

    veBAL Holders

    Existing locks are expected to expire before round one. Holders would exit the 80/20 BAL/WETH pool into BAL before redeeming.

    auraBAL and sdBAL Holders

    These positions would need to unwind through their own protocols and become BAL before the first-round deadline.

    Exploit-Affected LPs

    Recovered funds stay outside the BAL-holder distribution and remain allocated to the affected pools.

    A holder who has not converted auraBAL or sdBAL into BAL by the end of round one would not redeem through Balancer’s claim process. veBAL holders who extend their locks after the proposal date would also need to wait until those new locks expire.

    Special Rule for tetuBAL

    tetuBAL follows a separate rule because it is permanently locked. The proposal fixes tetuBAL ownership at the block when the forum post was published. Those holders would receive BAL equal to half of the measured BAL behind their tetuBAL position, then redeem that BAL in the same first-round process.

    First-Round Participation Determines Later Distributions

    The proposed first round would not be the only payment. After the six-month claim window closes, a second-round airdrop would go only to addresses that redeemed in round one. It would include unspent winddown funds, assets received after the first snapshot, and the share connected to BAL that was not redeemed.

    No separate claim would be needed for that second round. A final sweep six months later would also go to the same first-round redeemers. For BAL holders, missing the first window could therefore mean missing both the initial distribution and any later proceeds collected by the DAO.

    Treasury Estimate Is Not a Fixed Per-Token Value

    The claim rules explain who may receive assets; they do not establish how much each BAL could be worth. The $9 million figure is an estimate of the managed treasury at current prices, while other DAO wallets, positions, and receivables are still being inventoried.

    The amount available for distribution would be fixed only when round one opens, after the DAO has completed its asset inventory and an audit. It could change with token prices, recovery of receivables, funds identified as belonging to third parties, and the costs of completing the winddown.

    The plan sets aside up to $400,000 from November 1 onward: $150,000 through May 2027, $30,000 for the later distribution process, and a $220,000 reserve if needed. At the current $150,000 monthly cost base, the proposal argues that a capped winddown budget is easier to justify than open-ended operating expenses. Any amount not spent would return to the distribution pool.

    Recovered Exploit Funds Must Remain Separate

    Some funds recovered from attacks on Balancer may sit in DAO-controlled addresses, but the proposal states they do not belong to the general treasury. They belong to LPs in the affected pools and would need to be identified and excluded before the treasury snapshot.

    Recovery work would continue through private investigators and law enforcement. Any further funds recovered would go to affected LPs, rather than being added to the BAL-holder distribution.

    Governance Vote Decides Balancer’s Future

    The vote asks BAL holders to choose between preserving an independent protocol with an uncertain revenue path and accepting a structured exit while the treasury can still fund one. Until a Snapshot vote approves the proposal, Balancer’s pools, treasury assets, and operations remain under the current governance arrangements.

    This article is provided for informational purposes only and does not constitute financial, legal, or investment advice. The proposed winddown, its dates, and its distribution rules remain subject to governance approval and may change.

  • Balancer Considers Wind-Down After Restructuring Fails to Revive Revenue

    Balancer Considers Wind-Down After Restructuring Fails to Revive Revenue

    Balancer Proposes Protocol Wind-Down After Restructuring Fails to Generate Revenue

    Balancer, a decentralized exchange and automated market maker, has proposed winding down the protocol after its post-exploit restructuring failed to generate sufficient revenue. CEO Marcus Hardt acknowledged he underestimated how much a $128 million exploit in November 2025 would continue to weigh on adoption.

    Restructuring Cuts Costs But Revenue Falls Short

    The proposal was authored by Balancer Labs CEO Marcus Hardt and published on the Balancer governance forum on Monday. It calls for an orderly wind-down of the protocol and the distribution of its remaining treasury, currently worth more than $9 million, to BAL tokenholders.

    The move follows Balancer Labs’ shutdown in March, when executives opted to continue operating the protocol under a leaner structure. Hardt stated Monday that while the restructuring succeeded in cutting costs and delivering products promised to tokenholders, the revenue side of the plan fell short, echoing profitability challenges faced by several other DeFi protocols this year.

    “What did not come was enough revenue. Most of the protocol’s revenue still comes from v2, and v3 revenue has not grown to replace it. The product worked. It did not sell enough,”

    Hardt said in a statement on X.

    Exploit Impact on Revenue and Adoption

    Data from DefiLlama show that Balancer’s monthly protocol revenue fell to $371,000 in November from $1.13 million in October after an exploit affecting composable stable pools on its legacy v2 protocol. Revenue continued to trend downward into 2026, with August revenue at just $56,781.

    “The November 2025 exploit hit legacy v2 pools. v3 is a different architecture, but the event followed the name into every conversation since and made traction harder to build,”

    Hardt said on the Balancer forum.

    “I underestimated how much the exploit would continue to limit adoption,”

    he added in a separate post on X.

    Phased Shutdown Plan and Treasury Distribution

    Under the proposal, Balancer would begin a phased shutdown next month, with new business development ending and liquidity providers given until Oct. 30 to prepare to exit the protocol. Meanwhile, pools that can be paused would move to withdrawal-only, while those that cannot be paused will continue working but have the protocol fee set to zero where contracts allow it.

    From Nov. 1, Balancer would operate only the minimal infrastructure needed to support withdrawals, and the DAO would be wound down, with a small team to manage the transition. The proposal sets aside up to $400,000 for the wind-down process.

    BAL holders would receive the remaining treasury on a pro-rata basis, with the first distribution scheduled for May 2027, when holders would burn their BAL in exchange for their share of the treasury assets. A second distribution would return unspent wind-down funds and unclaimed assets from the first distribution, followed by a “final sweep” six months later.

    “Continuing on the current path spends the treasury to arrive at the same place later. That treasury belongs to BAL holders. The question is whether what remains reaches holders while it is still substantial, or is spent first on a path that has already been tried,”

    Hardt said.

    Governance Vote Scheduled

    The wind-down requires approval from BAL holders, with a snapshot vote scheduled for Sept. 25 to 29. A rejection would leave Balancer’s existing operating framework in place.