Balancer could begin a two-year shutdown process after co-founder Marcus Hardt submitted a governance proposal to wind down the decentralized finance protocol, end new business expansion and return its treasury assets to BAL token holders. The plan would move liquidity pools toward withdrawal-only access, scale down operations and open the first token-redemption period around the end of May 2027, with final liquidation targeted for July 2028.
The proposal is still subject to a Snapshot governance vote scheduled from Sept. 25 through Sept. 29. If token holders reject it, Balancer would retain its current operating structure. If approved, the plan would turn one of DeFi’s earlier automated-market-maker protocols into a managed exit, with the DAO seeking to preserve its remaining treasury rather than finance a renewed growth effort.
Hardt’s proposal estimates the Balancer treasury at roughly $9 million and calls for a “burn BAL, claim pro-rata assets” mechanism. Holders would permanently destroy BAL tokens in return for a proportional share of assets available for distribution. The eventual value of each claim would depend on the assets consolidated by the DAO, winddown costs, the number of tokens submitted for redemption and any outstanding liabilities.
The governance materials place Balancer’s token market value at about $7.7 million, below the stated value of the treasury. That gap has made the proposed redemption structure central to the debate: Balancer’s remaining value appears to be concentrated more in its treasury than in the revenue prospects of its operating protocol.
Revenue gap drove the proposed exit
Hardt’s proposal describes an operation whose income no longer covers its fixed costs. Network revenue fell to $56,781 in August, according to the governance post, compared with approximately $150,000 in monthly flat operating costs.
The DAO had already approved a restructuring in April intended to make Balancer sustainable on protocol revenue. That program eliminated BAL emissions, removed the economic role of vote-escrowed BAL, or veBAL, directed protocol fees to the DAO treasury, reduced the operating budget by roughly one-third and cut the team to 12.5 full-time-equivalent roles.
Those measures reduced spending but did not solve the underlying revenue problem, the proposal says. Balancer’s older v2 system continued to generate most of the protocol’s income, while revenue from v3 did not grow enough to replace it.
Development work continued despite the tighter budget. Boosted Pools remained active, while reCLAMM, a liquidity-management product that launched following a security audit, was renamed AutoRange Pools. Hardt wrote that these products failed to produce revenue at a level that would support a continued operating business.
The proposal therefore abandons the premise of rebuilding through expansion. After the notice period ends, the DAO would stop pursuing new business development and cut staffing to a small transition group responsible for pool exits, treasury consolidation and token-holder distributions.
October restrictions would change pool access
Under the proposed schedule, operational restrictions would begin on Oct. 30. Pausable pools would be paused and placed into withdrawal-only mode, preventing further normal activity while allowing liquidity providers to remove funds. Pools already in Recovery Mode would be handled under the rules embedded in their individual smart contracts.
Other adjustable pools would set protocol fees to zero, according to the proposal. The DAO’s bug bounty program would also end on Oct. 30, removing a security incentive program as the protocol enters its cleanup phase.
The next day, Oct. 31, would mark the end of the contributor notice period. The operating budget approved through October under BIP-918 would not carry into a new funding cycle. Any unused amount, after expenses tied to the winddown, would return to the treasury, Hardt’s proposal says.
For liquidity providers, the transition would make pool-specific contract design increasingly relevant. Some pools can be paused and converted to withdrawal-only operation through governance controls, while others have constraints defined by their code. Users with positions in Balancer pools would need to follow the status of the pools they use as governance executes any approved restrictions.
From November through December 2026, the DAO would retain only infrastructure considered necessary for the exit and remove low-risk permissions that no longer serve a purpose. The plan also calls for gathering assets and receivables held in DAO wallets, fee addresses and other locations before distributions begin.
Security breach remains part of the adoption case
Hardt linked Balancer’s current adoption difficulties partly to a major exploit in November 2025 involving Balancer v2 Composable Stable Pools. The governance timeline says attackers used flash loans alongside precision-rounding and Vault accounting weaknesses to drain staked tokens and stablecoins across Ethereum mainnet and several layer-2 networks.
Losses from that exploit reached $128 million, according to the proposal. The incident struck a protocol whose model relies on liquidity providers trusting its smart-contract infrastructure with pooled assets, making a recovery in usage and revenue more difficult even as the team continued building products.
Balancer once held more than $2.4 billion in total value locked, according to figures included in the governance materials. BAL also reached a peak price of $74.45, corresponding to a fully diluted valuation above $7 billion. The proposal puts current total value locked near $58 million, illustrating how far activity has contracted from those earlier levels.
Redemption would be spread across three rounds
The first BAL redemption window would open near the end of May 2027 and remain open for six months. Rather than distribute all assets immediately, the DAO proposes three redemption rounds.
The initial round would distribute the treasury assets available after the cleanup and consolidation work. Two later rounds would address funds that arrive after the first distribution, remaining winddown budget and BAL that was not submitted during the first claim period.
That staggered approach reflects the practical limits of closing a multichain DeFi system. Assets, fees and receivables may sit across several wallets and contracts, while the DAO must retain enough funding to manage technical changes and legal or operational obligations through the end of the process.
The upcoming Snapshot vote will decide whether Balancer pursues that controlled liquidation or continues operating under the post-April restructuring. Approval would place the protocol on a path where its remaining treasury, rather than future fee growth, becomes the basis for BAL holders’ eventual recovery.
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