A Treasury Council member has proposed an orderly winddown of Balancer, subject to approval by BAL holders in a governance vote. The plan would halt new development, reduce the protocol to a limited withdrawal service and eventually distribute the remaining treasury to eligible BAL holders.

The proposal was published on the Balancer governance forum. It argues that Balancer is spending more each month than the protocol and treasury management generate. Monthly costs are approximately $150,000, compared with about $30,000 in protocol revenue during August. Treasury management contributed roughly $25,000 per month, but the DAO still spent more than it earned.

Balancer had previously sought profitability through lower costs, a simplified token model and growth in its newer v3 products. According to the proposal, those efforts did not produce enough sustained revenue to replace the protocol’s older v2 income. Its authors argue that a capped exit budget is preferable to continuing operating expenses without a clear path to profitability.

Proposed transition would start with withdrawals

No changes would take effect unless BAL holders approve the proposal. If approved, Balancer would enter an exit period rather than shut down immediately.

• Before October 30, 2026: Liquidity providers would receive an exit window and access to withdrawal guidance.
• From October 30, 2026: Pools that can be paused would switch to withdrawals-only, and the bug-bounty program would end.
• By the end of May 2027: The first proposed BAL treasury-redemption round would open.
• By the end of November 2027: The six-month first-round redemption window would close.

Balancer does not hold liquidity-provider assets in the same way a centralised exchange holds customer deposits. Users can withdraw through the smart contracts even if the organisation stops maintaining its usual interface. Pools whose contracts cannot be paused could remain active, with protocol fees set to zero where the contracts allow it.

Holders would follow different redemption routes

The proposed distribution would not use one process for every Balancer user. Liquidity providers would need to follow the withdrawal route for their pool, while BAL holders and wrapper-token holders would face later redemption rules and separate deadlines.

A holder who has not converted auraBAL or sdBAL into BAL by the end of the first round would not be able to redeem through Balancer’s claim process. veBAL holders who extend their locks after the proposal date would also have to wait until the new lock periods expire.

tetuBAL would follow a separate rule because it is permanently locked. The proposal would fix tetuBAL ownership at the block when the forum post was published. Those holders would receive BAL equal to half of the measured BAL underlying their tetuBAL positions and would then redeem that BAL through the same first-round process.

First-round redemption would determine later distributions

The proposed first round would not be the only distribution. After its six-month claim window closes, a second-round airdrop would be sent only to addresses that redeemed during the first round. It would include unspent winddown funds, assets received after the initial snapshot and the share associated with BAL that was not redeemed.

No separate claim would be required for the second round. A final sweep six months later would also go to the same first-round redeemers. For BAL holders, missing the initial window could therefore mean losing access both to the first distribution and to later proceeds collected by the DAO.

Treasury estimate could change before distribution

The claim rules describe who may receive assets but do not establish how much each BAL could be worth. The more than $9 million figure is an estimate of the managed treasury at current prices. Other DAO wallets, positions and receivables are still being inventoried.

The amount available for distribution would be determined only when the first round opens, after the DAO completes its asset inventory and an audit. The amount could change with token prices, the recovery of receivables, funds identified as belonging to third parties and the costs of completing the winddown.

The plan would set aside up to $400,000 from November 1 onward: $150,000 through May 2027, $30,000 for the later distribution process and a $220,000 reserve if needed. At the current monthly cost base of $150,000, the proposal says a capped winddown budget is easier to justify than open-ended operating expenses. Any amount that remains unspent would return to the distribution pool.

Recovered exploit funds would remain separate

Some funds recovered from attacks on Balancer may be held in DAO-controlled addresses, but the proposal says those funds do not belong to the general treasury. They belong to liquidity providers in the affected pools and would need to be identified and excluded before the treasury snapshot.

Recovery efforts would continue through private investigators and law enforcement. Any additional funds recovered would go to affected liquidity providers instead of being added to the distribution for BAL holders.

Vote concerns Balancer’s remaining runway

The vote asks BAL holders to choose between preserving an independent protocol with an uncertain revenue path and accepting a structured exit while the treasury can still fund one. Until a Snapshot vote approves the proposal, Balancer’s pools, treasury assets and operations will remain under the current governance arrangements.

The proposed winddown, its dates and its distribution rules remain subject to governance approval and may change. This article is provided for informational purposes only and does not constitute financial, legal or investment advice.

Source: Coindoo