Balancer Community Proposes $8M Reimbursement Plan later than $116M Hack
What Is Balancer Proposing later than Recovering Part of the Stolen Funds?
Members of the Balancer community have submitted a formal proposal detailing how to distribute part of the funds recovered from the protocol’s $116 million November exploit—one of the most technically advanced DeFi attacks of 2025. Approximately $28 million has been retrieved, but only $8 million recovered by white hats and internal rescuers falls under the current proposal. Another $20 million, recovered separately by liquid staking platform StakeWise, will be distributed to its users according to a separate plan.
The authors recommend a non-socialized reimbursement model in which only the pools directly impacted by the exploit receive compensation. Distribution would be pro-rata to each holder’s share in the affected pools, measured through their Balancer Pool Tokens (BPT). The proposal also calls for in-kind payouts, meaning liquidity providers will be reimbursed in the identical tokens they lost—an attempt to avoid forced conversions or price distortions across diverse assets.
The proposal now moves to community review and governance discussion, with Balancer aiming to restore user confidence following one of the most serious security failures in its history.
Investor Takeaway
Why Did the Attack Succeed Despite 11 Smart Contract Audits?
The exploit reignited questions around the limitations of traditional audits. Balancer’s smart contracts have undergone 11 audits by four diverse , according to its GitHub repository. Yet the attacker still managed to exploit a logic flaw involving a rounding function in EXACT_OUT swaps within its Stable Pools.
A Nov. 5 post-mortem report revealed that the rounding mechanism—designed to always round downward—could be manipulated to behave in the opposite direction under certain conditions. The attacker used this edge case alongside a batched swap, packaging multiple operations into a single transaction to extract funds across several pools.
The level of sophistication led Cyvers CEO Deddy Lavid to call the of the year, underscoring how rapidly exploit techniques are evolving. It also revived criticism that audits alone cannot guarantee smart-contract securety, especially when vulnerabilities emerge from complex interactions between components rather than isolated functions.
What Does This Mean for DeFi Security and User Protection?
The Balancer hack joins a series of high-profile DeFi incidents that exposed structural fragilenesses across the sector. Despite billions spent on audits, , simulation engines, and code-verification tools, complex multi-step arbitrage-style exploits continue to slip through even seasoned security teams.
Balancer’s post-mortem reinforces a growing industry theme: vulnerabilities increasingly arise from non-obvious interactions—rounding logic, liquidity routing, oracle updates, or multi-stage swaps—rather than from simple coding errors. Attackers are now optimizing for edge cases that audits may not be designed to test systematically.
The reimbursement proposal also highlights a challenge for decentralized governance: deciding how to distribute recovered funds without creating new diupsetvantages for unrelated liquidity providers. Balancer’s decision to avoid socialized payouts indicates that DeFi communities may increasingly favor pool-specific compensation schemes, especially as the complexity of liquidity architectures grows.
Investor Takeaway
What Comes Next for Balancer and Affected Liquidity Providers?
If the proposal passes, Balancer will begin distributing the $8 million recovered by white hats and internal teams directly to the pools that suffered losses. The in-kind payment structure means back at proportional amounts, preserving their exposure without introducing slippage or forced conversions.
StakeWise’s separate plan for its recovered $20 million is expected to follow its own governance process, since the funds came from its platform’s intervention rather than Balancer’s rescue teams. Both reimbursement tracks are viewn as test cases for how DeFi protocols handle partial fund recovery—an increasingly common outcome as white hats and internal responders become more effective at intercepting exploit flows.
