Category: Business

Balancer Labs has decided to call it quits six months after its namesake protocol suffered a major security breach that founders say caused reputational damage and triggered a sell-off in the Balancer token.

The protocol, created to build and manage a DeFi platform for token swaps and liquidity pools, was hit by an exploit in November last year, after an attacker drained $128 million across six blockchains in just 30 minutes from Balancer V2’s Vault contract.

The “exploit created real and ongoing legal exposure,” co-founder Fernando Martinelli wrote in a statement on Monday,  adding that Balancer Labs was left without “any sources of revenue.” 

“Maintaining a corporate entity that carries the liability of past security incidents, while the protocol itself needs to move forward unburdened, is not responsible stewardship,” Martinelli added.

Balancer no longer needs a traditional company above it, and its DAO, Foundation, and service-provider structure should carry the protocol forward, with key staff set to move into a new operating arm if governance approves, he added.

The hack worked by exploiting a small pricing error in Balancer’s older V2 stable pools, where the system inconsistently rounded numbers during swap calculations, according to an analysis by blockchain security firm BlockSec.

“Beyond the immediate financial impact, the incident led to three lasting pressures: unrecovered funds, ongoing legal and operational exposure, and a significant erosion of user trust,” Brian Wong, senior audit engineer at BlockSec, told Decrypt. 

Transitioning to a DAO governance model could help “isolate legal risk, reduce fixed operational overhead, and shift governance and accountability more directly to the community,” Wong added.

“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,” Martinelli said.

Balancing act

The wind-down points to both the longer-running weaknesses in Balancer’s token and governance model and the pressure the November hack put on the protocol’s ability to sustain itself, observers told Decrypt.

Balancer’s decision “exposes structural failure” that points to how it has “capitulated to a broken model where emissions faded, governance weakened, value capture stayed shallow,” Dominick John, analyst at Zeus Research, told Decrypt.

While streamlining its operations could be the right call, it comes as a “late-stage patch,” he said, adding that older DeFi models built around token rewards and incentive-driven growth are being “phased out.”

The shutdown also appears to be Balancer’s way of finding “a quick way to escape legal risks” after the November 2025 hack, Ryan Yoon, senior analyst at Tiger Research, told Decrypt.

It gives Balancer a way to use the DAO transition to drop veBAL, its escrow governance model, which Yoon suggested had become part of the protocol’s broader structural problems.

The next test is whether Balancer’s smaller team can “actually fix governance,” Yoon said, by keeping governance aligned, security intact, and the treasury stable enough to carry the protocol forward, areas John said are “critical to keeping Balancer relevant.”

Crypto is inching closer to Australia’s retirement system, with one of the country’s largest super funds now actively exploring how to offer it to members.

Australian industry superannuation fund Hostplus is exploring whether to open a path into Bitcoin and other digital assets for its members, according to a Bloomberg report.

This move would put the $105 billion (A$150 billion) retirement giant among a small group of global pension funds willing to take on crypto exposure.

“As soon as one super fund breaks ranks on crypto assets, I’d say there’s a high probability the rest follow,” Jason Titman, CEO of Australian crypto exchange Swyftx, told Decrypt. “Around a quarter of Australians want their super funds to offer digital assets, and that number is likely to increase when the market is regulated.”

The fund’s CIO, Sam Sicilia, told Bloomberg the plan is focused on Choiceplus, a self-directed window that lets members manage a slice of their own retirement savings, currently about 1% of the fund’s total book. 

“There’s certainly a demand from some of our members who write in and say, ‘Why can’t I have access to cryptocurrency?’” he said.

A launch could come as early as next financial year, pending regulatory approval and internal product design work, Sicilia said. 

Hostplus, which serves nearly two million members with an average age in the mid-to-late 30s, is still reviewing consumer protections and product design.

Sicilia said the fund’s view of crypto has evolved considerably since an earlier assessment roughly a decade ago, and that the current review covers not just Bitcoin but a broader universe of digital assets, including potential tokenized exposure to areas such as music rights.

Kraken Australia managing director Jonathon Miller told Decrypt the move, if implemented, is a “positive step forward for the sector.” 

“We have come a long way in the last decade, and for many Australians, digital assets are increasingly viewed as a legitimate long-term investment; however, access to them, outside of SMSFs, has remained limited,” he said. 

“Expanding availability through platforms like Choiceplus gives investors more flexibility in how they build and diversify their portfolios,” Miller said, adding that “more choice” and “easier access” would benefit “both consumers and the broader market”.

Still, volatility remains a key barrier as AMP Super, one of the few funds to experiment with crypto, recently cut its Bitcoin futures exposure to around 0.02% after a sharp downturn wiped out roughly $700 billion from the market earlier this year. 

“We’ve had essentially no exposure during most of the recent sell-off,” AMP Super head of portfolio design Stuart Eliot told Investment Magazine last month.

The position dates back to May 2024, when AMP Super added Bitcoin futures via its dynamic allocation strategy.

On Myriad, a prediction market owned by Decrypt’s parent company Dastan, market sentiment leans toward upside, with users seeing a 50.7% likelihood of Bitcoin reaching $84,000 rather than falling to $55,000.

The world’s largest crypto currently sits at $70,599, up 3.6% on the day, according to CoinGecko data.

Protesters took to the streets of San Francisco on Saturday, stopping outside the offices of Anthropic, OpenAI, and xAI to call for a conditional pause in the development of increasingly powerful artificial intelligence.

According to Stop the AI Race founder and documentarian Michael Trazzi, roughly 200 protesters participated in the demonstration. Participants included researchers, academics, and members of advocacy groups such as the Machine Intelligence Research Institute, PauseAI, QuitGPT, StopAI, and Evitable.

“There are a lot of people who care about this risk from advanced AI systems,” Trazzi told Decrypt. “Having everyone marching together shows people are not isolated in thinking about this by themselves. There are a lot of people who care about this.”

The march began at noon outside Anthropic’s offices, then moved to OpenAI and then to xAI. At each stop, activists and speakers from the participating organizations addressed protesters.

According to Trazzi, the protest aimed to push AI companies to agree to a coordinated pause in building more powerful AI models and create treaties with AI developers in other countries to do the same.

“If China and the U.S. agreed to stop building more dangerous models, they could focus on making the systems better for us, like medical AI,” he said. “Everyone would be better off.”

Stop the AI Race’s proposal calls for companies to stop building new frontier models and shift work toward safety, if other major labs “credibly do the same,” which Trazzi said makes protesting in front of AI labs’ offices more important.

Steady opposition

The protest is the latest in a series of efforts to disrupt AI development.

In March 2023, the Future of Life Institute published an open letter demanding a moratorium on further enhancements to the leading AI tool following the public launch of ChatGPT the year before.

Signers included xAI founder Elon Musk, Apple co-founder Steve Wozniak, and Ripple co-founder Chris Larsen. Since then, the “Pause Giant AI Experiments” open letter has garnered over 33,000 signatures.

In September, Trazzi staged a week-long hunger strike outside Google DeepMind’s London offices, while Guido Reichstadter held a parallel hunger strike outside Anthropic’s San Francisco offices.

Government officials and supporters of continued AI development argue that slowing research in the U.S. could give competitors abroad an advantage.

Last week, the Trump Administration published its AI framework to establish a national standard for laws governing AI development. The White House framed it as a commitment to “winning the AI race.”

“Even if you’re in China or any country in the world, nobody wants systems they cannot control,” Trazzi said. “Because we’re in this race between companies and countries to build the systems as fast as possible, we’re taking shortcuts and cutting corners on safety. There is a race that has no winners. What we have is a system we cannot control, and that’s why it’s called a suicide race.”

But even if AI developers agreed to pause development, verifying it may be easier said than done. Trazzi suggested one way to verify a pause would be to limit the computing power used to train new models.

“If you limit how much compute a company can use to build these systems, then you’re pretty much limiting developing new models,” he said.

Following the San Francisco protest, Trazzi said additional demonstrations could take place in other locations where major AI companies operate.

“We want to show up where the employees are,” he said. “We want to talk to them, and we want them to talk to their leadership and have things moving from inside,” adding that whistleblowers will have some amount of power because “they’re the ones building it.”

OpenAI, Anthropic, and xAI did not immediately respond to Decrypt’s requests for comment.