Balancer has proposed sunsetting the protocol through a phased wind-down that would move eligible pools to withdrawals-only status next month and distribute the DAO treasury back to token holders.
The proposal follows an April restructuring intended to restore profitability through cost reduction and ending emissions. However, revenue has continued to decline since then, prompting the governance review.
Turnaround Plan Falters
The April restructuring included budget cuts and protocol fee routing to the DAO. The plan anticipated that Version 3 (v3) would drive growth after its AutoRange Pools shipped.
Despite v3's launch, most protocol revenue continues to come from the older v2 contracts. v3 revenue has not grown sufficiently to replace v2 earnings. Monthly revenue peaked at just over $1 million in October 2025 before collapsing following a November exploit that drained $128 million from v2 pools, according to DefiLlama data. Revenue has not recovered since.
Revenue declined from approximately $200,000 in April to under $60,000 in August, with September trending lower still. The protocol's monthly burn is estimated near $150,000, exceeding incoming revenue.
Marcus Hardt, Balancer Treasury Council member and proposal author, stated that the current path would deplete the treasury without changing the outcome. He argued that distributing remaining treasury funds to BAL holders makes more sense than continuing to spend down reserves on an already-attempted strategy.
Wind-Down Timeline
Pools that can be paused would transition to withdrawals-only on October 30. Contracts that cannot be paused would continue operating with protocol fees set to zero where technically possible.
Contributor contracts end October 31, after which a minimal team would manage the withdrawal process with spending capped at $400,000 through final payout.
The DAO treasury, valued at a minimum of $9 million at current prices, would distribute to holders in multiple rounds. Round one distributions would open at the end of May 2027, with holders burning BAL to claim pro rata shares. The distribution window would close in November 2027, followed by an airdrop in January 2028 and a final sweep six months later.
The proposal would also cancel a previously approved BAL buyback and exclude funds recovered from the exploit from distributions, keeping those assets with affected liquidity providers.
Governance Vote
Snapshot voting runs through September 29, requiring a quorum of 5 million BAL. Contributors are separately preparing a proposal to maintain infrastructure under a new name. If the wind-down proposal passes, Balancer would join other DeFi projects that have closed operations this year.
