Balancer Labs, the entity behind the DeFi protocol Balancer, is moving to wind down its current structure after months of financial strain. Its leadership has proposed a scaled-down model to keep the Balancer protocol operational.
CEO Marcus Hardt said two governance proposals have been submitted to overhaul the protocol’s structure, following months of crisis management after the November exploit.
Economic Model Breakdown
In a recent post on X, he explained that while Balancer’s core technology, including its v3 upgrade and boosted pools, remains functional, the economic design around the protocol had become unsustainable.
According to Hardt, Balancer was allocating excessive incentives to attract liquidity relative to the revenue generated, which led to dilution of BAL token holders. The proposed changes aim to address this by eliminating BAL emissions, redirecting all protocol fees to the treasury, lowering swap fees retained by the protocol to benefit liquidity providers, and t
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