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Executives at Balancer Labs are now pushing for the protocol to be managed by the Balancer Foundation and Balancer’s DAO.Balancer Labs, the team behind the decentralized finance protocol Balancer, is shutting down after mounting financial pressure and a $116 million hack in November, with executives proposing continuation of the protocol under a leaner, more cost-effective structure.
“After careful consideration, I have decided to wind down Balancer Labs. This is not a decision I take lightly,” one of Balancer Protocol’s founders, Fernando Martinelli,on Monday, adding that Balancer Labs has become a “liability rather than an asset to the protocol,” as it has been operating without revenue.that it was spending too much to attract liquidity relative to the revenue the protocol is making, a strategy that came at the cost of diluting Balancer token holders.$500 million TVL drop over the next two weeks. Balancer’s TVL has since fallen to $158 million, showing how challenging it is for DeFi protocols to“created real and ongoing legal exposure” and that maintaining a corporate entity that carries the liability of past security incidents wasn’t sustainable.Moving forward, Hardt and Martinelli are pushing for Balancer’s future to be managed by the Balancer Foundation and the protocol’sMartinelli advocated for Balancer to adopt a more “lean continuation path,” which involves cutting BAL emissions to zero, restructuring fees to enable Balancer’s DAO to capture more revenue,“Balancer still has real value to build from here. If we can make this transition work, we have a real chance to build a stronger and more sustainable protocol on the other side of it,” Hardt said. Despite the tokenomics issues, Martinelli noted that Balancer is “still generating real revenue” at over $1 million across the past three months: “That’s not nothing — that’s a functioning protocol buried under a broken tokenomics model and an overweight cost structure,” he said. “The problem isn’t that Balancer doesn’t work. The problem is that the economics around Balancer aren’t working. Those are fixable.”Cointelegraph is committed to independent, transparent journalism. This news article is produced in accordance with Cointelegraph’s Editorial Policy and aims to provide accurate and timely information. Readers are encouraged to verify information independently. Read our Editorial Policy
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