Balancer Begins Discussing Recovery Plan Following DeFi Breach
Balancer DAO has initiated discussions about a recovery plan after a $110 million exploit. The DAO plans to distribute $8 million in recovered assets to impacted liquidity providers, with a structured payout and white hat reimbursement mechanism for users.
Balancer suffered a major exploit earlier this month, losing over $110 million from its Balancer v2 vaults. A smart contract flaw caused the exploit, making it the protocol’s third major security incident.
Balancer DAO Proposes $8M Recovery Plan
Balancer DAO has started discussions around a plan to distribute $8 million in recovered assets to affected liquidity providers. The discussions begin weeks after a major exploit that drained over $110 million from its Balancer v2 vaults. The recovered funds were rescued by whitehat actors and Balancer’s internal teams shortly after the November 3 attack. According to a request for comment (RFC) posted by DAO contributor Xeonus, the proposed plan includes a structured payout for whitehats and a reimbursement mechanism for users, based on snapshot data of their holdings at the time of the exploit.
The plan aligns with Balancer’s Safe Harbor Agreement, which outlines rules for ethical hackers recovering funds. The Safe Harbor Agreement caps bounties at $1 million per incident and requires complete Know-Your-Customer (KYC) details. It also sanctions screenings from participating whitehats. Several anonymous rescuers on Arbitrum refused to identify themselves and waived the bounty claim.
Recovered Tokens
The recovered tokens include WETH, rETH, WPOL, and MaticX. All liquidity providers will receive their payments in the same tokens originally provided, with the amount calculated on a per-pool pro-rata basis. Once developed, a claim mechanism will require users to accept Balancer’s updated terms of use if the DAOs move the approval to voting.
While the DAO is redistributing $8 million, another $19.7 million in osETH and osGNO was recovered by StakeWise, a whitehat hacker. These funds will be redistributed separately. Another $4.1 million was recovered by internal teams in a coordinated effort with another whitehat, Certora. However, Certora is ineligible for whitehat bounties due to prior service agreements.
As a result of the exploit, the total value locked on Balancer has fallen from $775 million to $258 million. Additionally, the protocol’s native BAL token has lost 30% in value.
The Balancer Hack
Deddy Lavid, the CEO of blockchain cybersecurity company Cyvers, described the Balancer hack as one of the most sophisticated attacks of 2025. The hack highlighted the need for better security as threats continue evolving. Balancer’s smart contracts had been audited by some of the best blockchain security firms. However, the platform still fell victim to the hack. Balancer’s GitHub page states that its code has been audited 11 times by four different blockchain security companies. This has prompted several users to question the value of the audits and whether they actually ensure code safety.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.