Despite the ever-growing technology, the crypto world is not yet entirely free from threats and exploits. It is not uncommon for a single small vulnerability to lead to a breach resulting in hundreds of millions in losses.
One example is Balancer, a top decentralized exchange that had to shut down after a $116 million breach.
Balancer was one of the first Automated Market Makers (AMMs) in Decentralized Finance (DeFi). Launched in 2020 on the Ethereum blockchain, AMMs allow users to buy and sell assets directly via smart contracts without intermediaries.
AMMs replace the order books commonly used in traditional exchanges with the concept of liquidity pools. Balancer allows users to create customized liquidity pools capable of holding various types of tokens in dynamic weights. The second version of this protocol introduced a unified vault system.
Also Read: What is Liquidity Pool: Definition, How It Works, and Its Role in DeFi
Unfortunately, this led to Balancer’s downfall. In November 2025, Balancer’s v2 vault architecture was attacked. The attacker manipulated the smart contract to execute transactions that drained $116 million of Balancer’s funds.
On top of that, Balancer’s integrated nature caused various liquidity pools to interact deeply. The stolen funds were immediately siphoned to new crypto wallets that were nearly impossible to recover.
Finally, on March 24, Balancer co-founder Fernando Martinelli confirmed that he would be winding down the operation of Balancer Labs, the company behind Balancer. This decision was made following the November 2025 attack, which led to prolonged legal and financial issues that made it difficult to continue Balancer’s operations.
However, Martinelli emphasized that the Balancer protocol would not cease to exist. Balancer will undergo a structural reset, during which the core team will work on a new operational structure.
“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,” Marticelli concluded.
