Author: Fernando Martinelli | Co-Founder, Balancer Protocol
Hi everyone,
I’m writing this because I believe you all deserve full transparency from me on where I stand, what I’ve decided regarding Balancer Labs, and why I still believe in the people building this protocol.
The last 6 months have been the hardest period since we launched Balancer. The November exploit, the reputational damage, the token trading below NAV — none of this is lost on me. I’ve spent months thinking about what the honest path forward looks like, not just for me and BLabs, but for every BAL holder, every LP, and every contributor who has given their energy to this project.
Balancer Labs Is Shutting Down
After careful consideration, I have decided to wind down Balancer Labs. This is not a decision I take lightly — BLabs has been the original home of this protocol, the entity that incubated the idea, funded early development, and brought Balancer to life. But the reality is that BLabs, as a corporate entity, has become a liability rather than an asset to the protocol’s future and is just not sustainable as is without any sources of revenue.
The reasons are straightforward. The Nov 3 2025 v2 exploit created real and ongoing legal exposure. Maintaining a corporate entity that carries the liability of past security incidents, while the protocol itself needs to move forward unburdened, is not responsible stewardship. The Balancer protocol has evolved well beyond the point where it needs a traditional company sitting above it. The DAO, the Foundation, and the service provider model are how this protocol operates today, and that’s the right structure for what comes next.
The essential BLabs team members are to be absorbed into Balancer OpCo (pending governance vote). Marcus and Danko will be presenting the BIP for operations proposal, and I’m fully supportive of that process.
Why I’m Not Calling for a Full Wind-Down
I want to be honest: I have considered whether the right answer is to shut everything down. I’ve thought about it seriously. The market signal is brutal.
But here’s what I keep coming back to: the protocol is still generating real revenue. Over the last three months, Balancer generated over one million USD in total fees annualized. That’s not nothing — that’s a functioning protocol buried under a broken tokenomics model and an overweight cost structure. The problem isn’t that Balancer doesn’t work. The problem is that the economics around Balancer aren’t working. Those are fixable.
I’ve watched the team work through the response to the exploit, the reCLAMM development, the v3 migration. The people who are still here — Danielmk, Danko, Xeonus, Fábio, Marcus, and many others — are here because they believe in this. They’re not coasting. They’ve been in the trenches through the worst period this protocol has ever seen, and they came back with a plan that I think is credible.
The lean continuation path — cutting BAL emissions to zero, restructuring fees so the DAO actually captures revenue, reducing the team as much as possible, targeting much lower operating costs — is not a fantasy. That’s a real shot at a turn around, and the team has earned the chance to take it.
What I Support
I am fully supportive of the tokenomics restructure being proposed and the companion BIP for operations. Specifically:
Ending the emissions bleed. BAL emissions have been diluting holders and funding a circular bribe economy that costs more than it generates. Cutting emissions to zero is the single most important thing we can do for the token and the treasury.
Winding down veBAL. The ve model served its purpose, but it became a vehicle for meta-governance capture. Aura, Humpy, and the bribe markets turned veBAL governance into something unrepresentative of the actual Balancer front line. Moving to a leaner governance model will allow the team to focus on the essential.
Restructuring fees for sustainability. Routing 100% of protocol fees to the DAO treasury, reducing the V3 protocol share to 25% to attract organic liquidity — this is how you build a self-sustaining protocol. The current split, where the DAO captures only 17.5% of what the protocol generates, is not sustainable anymore.
The BAL buyback. Offering BAL holders exit liquidity at a fair price is the right thing to do. If you believe in the restructured Balancer, you stay. If you don’t, you get a fair exit. That’s honest dealing, and it clears the overhang.
The focused product scope. Concentrating on reCLAMM, LBPs, stables/LST pools, weighted pools, and less EVM chains is exactly the kind of discipline a lean team needs. No more spreading resources across low-value deployments.
My Role Going Forward
I haven’t been part of the day-to-day operations for some time already, and after BLabs winds down I will cease to have any formal relationship with the protocol. But I remain a believer in the underlying technology and the team that’s staying. I’m happy to help as an advisor, a sounding board, and a supporter of whatever comes next.
I’ve seen what happens when DeFi projects that have lost momentum make a clean break and come back stronger. It’s possible. But it requires the courage to cut hard on what isn’t working, the honesty to face the market as it is, and the determination to execute with far fewer resources than you’re used to. I believe this team has those qualities.
Closing
Five years ago we set out to build programmable liquidity for DeFi. We built something real — technology that protocols like Aave, Gnosis, Lido, CoW, and dozens of others chose to build on. The v3 architecture is sound, and the products in the pipeline are differentiated. What failed was not the technology. What failed was the economic model wrapped around it, and the accumulated weight of security incidents that eroded the trust we built.
I believe Balancer still has a chance to turn things around and prove to token holders who stay that there can be product market fit and sustainability. The next 12 months will be crucial for the team to prove this possible.
This post reflects my personal views as co-founder and BLabs shareholder. The formal proposals are being authored by the core team and will be published separately for community discussion and vote.