Balancer Labs has announced it will wind down its core development operations, marking a major shift for one of decentralized finance’s longest-running automated market maker projects, even as the Balancer protocol itself continues to operate independently.

The team behind Balancer, one of the leading DeFi protocols in the early DeFi days of 2020-2021, confirmed it will shut down Balancer Labs, the primary development entity responsible for building and maintaining the protocol. The move reflects a broader transition toward decentralization, with ongoing development expected to be taken over by the community and external contributors.

At one point, Balancer was one of the leading protocols with total value locked (TVL) of ~$3.3 billion in November 2021.

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Following the 2025 hack, the protocol’s TVL has now fallen to below $200 million making the corporate entity, together with ongoing legal exposure following the back, unsustainable.

One of Balancer Protocol’s founders, Fernando Martinelli, said:

“The last months were extremely hard. We had the exploit, a long crisis response, a lot of difficult decisions, and some very painful conversations about what was and was not sustainable anymore. We also had to let go of people we deeply respect, not because they were not good enough, but because the structure around the protocol had stopped making sense. That is really the heart of it. The technology works. Balancer v3 works. Boosted pools work. The infrastructure we built is strong. What stopped working was the economic model around it. We were spending too much to attract liquidity relative to what that liquidity was actually generating in revenue. We were diluting BAL holders to sustain a system that, in my view, was no longer serving the protocol well. At some point, you have to be honest about that.”

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Despite the closure, the Balancer protocol will remain live on-chain. Liquidity pools, trading activity and existing integrations are expected to continue functioning without interruption, supported by its decentralized architecture.

Balancer Labs cited a combination of financial constraints and evolving market conditions as key factors behind the decision. The firm had been a central contributor to upgrades, governance coordination, and ecosystem growth since the protocol’s launch.

The transition underscores a wider trend across DeFi where projects are increasingly moving away from centralized development teams toward community-led models. However, it also raises questions about long-term sustainability, coordination and innovation without a dedicated core team.

Balancer’s governance framework and DAO structure are expected to play a critical role in determining the protocol’s future direction, including funding mechanisms for developers and continued technical upgrades.

The development comes amid a challenging environment for DeFi projects, with tighter funding conditions and increased competition pushing teams to rethink operational structures while maintaining protocol resilience.

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