Author: KarenZ, Foresight News
On November 3, 2025, a security breach resulting in losses exceeding $120 million largely shattered the illusion of growth for the veteran DeFi protocol Balancer.
This was Balancer’s largest security incident to date. But the deeper wounds are not in that astronomical figure.
Looking at the financial data attached to Balancer’s latest proposal, its fundamentals have long been bleak: the protocol’s annualized fees are about $1.65 million, with DAO’s estimated annual revenue only $290,000, accounting for 17.5%.
The remaining funds flow to veBAL holders, core pools, the Balancer Alliance plan, and other parties. The entire system appears to be a continuously running “money printer,” but in reality, it is leaking from both sides: on one hand, fees are split and lost layer by layer; on the other, BAL tokens inflate by about 3.78 million tokens annually, creating a continuous selling pressure of roughly $580,000 at current prices — note that BAL’s current fully diluted valuation (FDV) is only $11 million.
The annual operating budget is as high as $2.87 million, but with only $290,000 in annualized income, the gap reaches $2.58 million.
The DAO treasury (excluding BAL) has only about $10.3 million left. At this rate, the treasury will last less than four years.
After the security incident, Balancer’s TVL further plummeted. It dropped from $800 million to about $300 million, then continued to decline, now under $160 million. To recall, at its peak in 2021, Balancer’s TVL exceeded $3 billion.
Source: DefiLlama
Balancer has officially reached a crossroads. On March 23, 2026, the core team released two important governance proposals: a comprehensive overhaul of BAL token economics and a restructuring of operational architecture.
The core logic of these two documents can be summarized in one sentence: abandon the growth model driven by token issuance and shift to a revenue-driven sustainable operation.
Operational Restructuring: “Slimming down” the team, reducing annual budget by 34%
The proposal suggests dissolving Balancer Labs, with its core technical staff joining Balancer OpCo Limited as contractors, which will continue to operate as the legal agent of the DAO.
Team size will be cut from about 25 to 12.5 full-time equivalents (including dedicated service providers like Beets, MAXYZ), and the annual operating budget will be reduced from $2.87 million to $1.9 million, a 34% cut.
Product lines will also be sharply narrowed. Resources will focus on three commercially viable products: Boosted Pools (flagship product), reCLAMM (which will be relaunched after fixing vulnerabilities and possibly renaming), and LBP (token launch pools, for opportunistic operations).
Other exploratory directions—such as ETF structured products, yield optimizers, AI-driven liquidity tools—will only proceed if they meet “core KPI targets.”
On-chain deployment will also shrink. Maintaining V2 and V3 across more than nine chains has become unsustainable. The team will retain Ethereum, Gnosis, Arbitrum, and Base as core chains, while other deployments will be reviewed case-by-case based on fee income and operational costs; those that do not meet standards will be terminated.
Token Economics Reform: Rebuilding from the ground up, not minor tweaks
Halt BAL issuance, abolish veBAL
Once the proposal passes, Balancer will cease all BAL token incentives immediately, with no transition period.
At the same time, the veBAL governance mechanism will be officially abolished. Holders will stop receiving any economic benefits after the last bi-weekly fee distribution. The locked veBAL tokens will become purely governance tokens, waiting for their lock-up periods to expire naturally.
This is a painful decision, but the logic is clear: the veBAL mechanism has always had structural risks of oligopoly since its inception. Currently, Aura Finance (the veBAL governance protocol) and whales hold large voting rights, making the true community voice increasingly weak in governance. This mechanism not only failed to promote healthy protocol development but also became a vehicle for circular economic games—protocol funds flow through incentives to middlemen, whose votes then direct more incentives toward themselves.
If veBAL was once an experiment inspired by Curve’s design, the team now admits: the experiment is over, and the results did not meet expectations.
Regarding the termination of veBAL’s economic rights, Balancer will offer a $500,000 compensation program, directly distributed to veBAL holders as pure cash compensation.
All fees go to DAO treasury, reducing V3 protocol cut
All protocol fees—V2 swap fees, V3 swap fees, yield fees, LBP fees—will be redirected 100% into the DAO treasury, ending the previous multi-party split mechanism.
Meanwhile, the fee share for V3 will be reduced from 50% to 25%. This means that for the same transaction, liquidity providers will now receive 75% of the fee instead of 50%.
While these two actions seem contradictory, their underlying logic is consistent: the first eliminates the circular economy, allowing the treasury to access real usable funds; the second increases LP attractiveness by offering lower platform cuts in exchange for more organic liquidity and genuine trading volume.
The proposal estimates that, after reforms, DAO’s annualized revenue could reach approximately $1.22 million—more than four times the current $290,000.
Burn BAL tokens at $0.16 per token to exchange for stablecoins
The treasury will allocate 35% of its assets (currently about $3.6 million) into a dedicated pool, not to buy BAL on the secondary market but to open a “burn-to-exchange-stablecoins” channel: BAL holders can voluntarily send tokens to a contract to burn them and receive an equivalent amount of stablecoins based on NAV (net asset value), approximately $0.16 per token.
This window will open 12 months after the proposal passes and last for 12 weeks. Unused stablecoins after the window closes will be returned to the treasury. The 12-month waiting period is designed to allow veBAL holders to gradually unlock and participate.
As of writing, BAL is priced at $0.1548, below NAV. Offering an exit at NAV provides a more dignified option for those wanting to exit than a market dump.
If fully utilized, this channel could burn about 22.7 million BAL, roughly 35% of circulating supply, which is six times the current annual inflation.
Nine years of “runway,” enough?
If both proposals are approved, the team’s financial model projects:
DAO’s annualized revenue of about $1.22 million (assuming V3 fee reductions boost TVL), annual operating expenses of $1.9 million, buyback expenditure of about $3.6 million, plus $500,000 in veBAL compensation.
After buybacks and compensation, the treasury would still have about $6.2 million remaining, reducing the annual funding gap from roughly $2.6 million to $700,000, with a theoretical survival period close to 9 years.
For a DeFi protocol, nine years is enough to span a full industry cycle.
However, this model relies on optimistic assumptions: that V3 fee reductions will indeed boost organic TVL; that the reduced team can sustain daily operations and security; and that core products (especially reCLAMM) can successfully re-attract the market after fixes.
Any underperformance in these areas could significantly shorten the nine-year runway. The team is also clear that if DAO monthly income remains below $60,000 for three consecutive months, a revision proposal must be submitted to the community.
For Balancer, this is a near-all-in reform. Abandoning the once-proud veBAL mechanism and complex multi-party revenue sharing, returning to a minimalist core: letting real trading fees sustain the protocol, rather than relying on new token issuance to maintain a false prosperity.
Whether this bold overhaul will succeed ultimately depends on the market and time—long-term observation remains to be seen.
