Balancer DAO Q3 Financial Report and Year 2/3 Funding Impact Analysis

Authors: @Xeonus, @Danko8383 and @Tristan345

The financial impact of SP spendings vs income to the DAO are crucial parameters to keep track of. It allows us to assess the health of the DAO financials and underlying economic engine.

@Solarcure prepared a Year 2 SP Funding impact analysis showing that for Q2 of this year, we had a net positive income vs spending flow. That was mostly attributed to increased trading activity and the protocol fee split still sitting at 35%. In this report we present the results of the last quarter taking into account the adjustments made to the fee split as well as our ecosystem contributor composition.

Key findings

  • DAO revenue decreased by 75% mostly attributable to low trading activity, sunsetting of boosted pools, a resulting decrease in TVL as well as adjustment of the protocol fee split to the DAO from 35 to 17.5%
  • The overall service provider USDC spending in its current state would attribute to ~4.6mio USDC per annum
  • The various DAO entities currently hold ~5.8mio in USDC reserves
  • In its current setting, the DAO entities could fund all SPs until Q4’24 while still maintaining a stable reserve of roughly 2.2mio USDC even in this challenging environment

In this report we want to present the newest numbers considering the currently funded SPs until EOY as well as projections into 2023. These numbers are illustrative, based on current assumptions and also considering bearish and bullish scenarios, they do not account for revenue changes due to unknown possible new initiatives, or cost changes due to strategic decisions the DAO may take. The analysis is based on protocol fee income to date, providing numbers for Q1 to Q3.

The most important changes come from the reduction of the fee split to the DAO to 17.5% as voted in by this proposal: Snapshot

We prepared a spreadsheet to assess the current state of DAO revenue and spendings here

DAO Income and Distributions

Month Total DAO veBAL Passive veBAL veBAL Incentives
January $683,084 $239,079 $444,005 $172,042 $256,922
February $994,146 $347,951 $646,195 $297,016 $261,955
March $1,918,787 $671,575 $1,247,212 $388,260 $610,402
April $1,222,188 $427,766 $794,422 $166,074 $437,044
May $954,502 $334,076 $620,426 $90,488 $366,179
June $776,524 $271,783 $504,741 $114,864 $254,088
July $506,551 $88,646 $417,905 $82,726 $168,028
August $489,661 $85,691 $403,970 $189,832 $135,502
September $650,406 $113,821 $536,585 $286,332 $148,897
Total DAO veBAL Passive veBAL veBAL Incentives Aura Incentives
Annualized (Q1-Q2) $13,098,462 $4,584,462 $8,514,000 $2,457,488 $4,373,180 $1,781,060
Annualized (Q3) $6,586,472 $1,152,633 $5,433,839 $2,235,560 $1,809,708 $1,020,524


  • The overall revenue (mostly based on the fee split adjustments) decreased from $13mio annualized to $5.8mio, which is a decrease of around 55%
  • Because of the reduction in fee split revenue to the DAO, annualized income to the DAO has decreased significantly by 77.5% from $3.5mio to roughly $1mio .
  • In the current low trading activity environment, the DAO would need to 3x its revenue to achieve Q1-Q2 levels with the current fee split model.
  • For veBAL holders, the impact was less severe with a reduction of 43% in revenue split.

The last quarter has been one of the most challenging for Balancer DAO. Not only did we suffer the boosted pool exploit which luckily was mostly mitigated through the rapid and effective efforts of the community, but also suffered a DNS attack. Additionally, overall trading activity got reduced significantly, which can be nicely seen in these graphs:

(12 months, all chains, source: )

DAO Spendings

Spending (Stables)
Org Cost (USDC) Source
Beets MKT $360,000.00 Proposal
Beets TECH $300,000.00 Proposal
Foundation $333,291.00 Proposal
Opco ADM $250,338.00 Proposal
OpCo FE TEAM $964,700.00 Proposal
Maxis $583,080.00 Proposal
Three Rocks $720,840.00 Proposal
Hypernative $15,000.00 Proposal
Grants $84,000.00 Proposal
Onsite $187,500.00 Proposal


  • In its current state, the DAO requires $3.8mio per annum to fund all Service Providers and the current legal/operational framework. Until EOY 24 the DAO would require $4.7mio to fund all entities as they are currently set up.
  • The DAO and OpCo as of today hold a total of ~5.8mio USDC in reserves
  • Given the last quarter’s low income of roughly 250k USDC the DAO would still hold around 2.2mio USDC EOY 2024 given the current burn rate mentioned above

Income vs Spendings

Projected Spendings
FY23 Q4 $914,062
FY24 Q1 $992,812
FY24 Q2 $899,062
FY24 Q3 $992,812
FY24 Q4 $899,062
Total $4,697,811
Projected Revenue
FY23 Q4 $215,032
FY24 Q1 $215,032
FY24 Q2 $215,032
FY24 Q3 $215,032
FY24 Q4 $215,032
Total $1,075,162
Stable Reserves
Stables DAO $1,277,021
Stables Karpatkey $3,054,453
Stables OpCo $1,566,692
Stables EOY 24 $2,275,517

The dissolution of Orb Collective and reorganization of the integrations team led to an optimized overall spending regime. However, as mentioned above, the adjustment of the fee split resulted in overall less income to the DAO, although spendings remain stable. The following two graphs visualize this effect nicely:

(source: Balancer Analytics )

Cumulative USDC Burn since Protocol Fee Inception

(source: Balancer Analytics )


Assuming the current SP setup we can project an optimistic and pessimistic outlook for the current DAO setup. You can copy the spreadsheet and simulate different scenarios yourself.

Bearish Scenario

Let’s assume a bearish scenario where overall market conditions are unfavorable and overall trading activity and protocol fee income declines further by another 50% leading to income of roughly 100’000 USDC per quarter.

In this scenario, the DAO would still hold about $1.7mio in USDC reserves EOY 2024.

Bullish Scenario

Let’s assume a more favorable scenario where trading activity is constantly higher with fee income similar to levels in Q1 and Q2 before the fee split, resulting in roughly 850 '000 USDC in income per quarter.

In this regime, the DAO would still hold about $5.4mio in USDC reserves EOY 2024. This scenario is close to a net zero USDC burn which hovers currently around 900 '000 USDC.


  • Despite recent challenges, funding for year 2 in terms of stable reserves and income is mostly secured while other reserves shouldn’t be affected
  • USDC burn would be net zero for around 900 '000 USDC income per quarter.
  • Given these findings we should all be aware of the current financial situation of the DAO and act accordingly.

Final note: as per the new core pool automation, the % of revenue to the DAO doesn’t change. However, we expect to see a net positive inflow, given the higher allocation of voting incentives towards core pools.


Great thread, gents! Big props for putting this together in a concise way.

I went through the BIP 371 thread to understand why Governance decided to decrease the Treasury Fee Split while the Treasury seems to be running net-negative.

The argument seems that, given we have a runway for another year, we don’t need to gain USDC as we don’t see additional upside in growing the Treasury and would prefer issuing a more significant share to Token holders now.

My question: Are there any pointers for the minimum runway we want available in the Treasury? As a Ve holder, I would feel comfortable receiving fewer trading fees, if the Balancer Protocol can invest and grow more aggressively to increase market share and expand to new markets.

Reducing the percentage of trading fees distributed to stakers seems better than selling BAL in the open market, especially at current valuations (95% down from the top).

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This is really an open question, and there are no right or wrong answers.

An important thing to consider is that the current runway was also made possible by budgetary constraints and cost savings on SPs. These measures have been able to push us through the winter. However, should we enter a bull market with increased revenue, governance may opt to reinvest in teams or services that have been on the back burner due to these constraints.

We aim to maintain regular updates on these reports and projections, ideally on a quarterly basis. This consistency ensures heightened scrutiny of the state of the Treasury, enabling governance to make more informed decisions. My guess is it will be an ongoing process of iteration, but I think there’s a general preference to avoid altering the fee structures as much as possible to maintain a sense of financial stability and predictability.

As for the selling of BAL, we have been encouraging teams to ask for liquid funding in USDC, avoiding that tokens are sold to fund DAO activities.

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I made a major revision of the report also presenting the effective distribution numbers to veBAL holders, and the veBAL and Aura incentives to better understand how the revenue is split amongst components in the DAO. Additionally, I found an inconsistency from the old report in February and March which I also fixed.

The overall picture of the story doesn’t change though.

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