Balancer Contemplates Survival Mode, Revamped Tokenomics and Operational Structure

Today, the Balancer Foundation – an independent community steward for the Balancer ecosystem – submitted a radical restructuring plan with the hope of more than doubling the embattled exchange's operational runway.

The proposed changes come in the aftermath of Balancer's devastating hack last November, which drained tens of millions dollars from the protocol's liquidity vaults and left its development team unable to meet performance-based KPIs necessary for budget disbursements.

What's the Scoop?

• Tokenomics Overhaul: In one governance post titled "BAL Tokenomics Revamp," the Balancer Foundation implores voters to transition from emission-subsidized growth to revenue-driven sustainability. At its highest level, the proposal would rebalance Balancer's budget by eliminating BAL token utility. Key changes include:
  • Halting BAL incentives for liquidity providers;
  • Increasing fee cut retained by LPs from 50% to 75%;
  • Discontinuing veBAL and its associated fee sharing program;
  • Diverting 100% of all protocol fees to the DAO Treasury; and
  • Offering a BAL buyback program for token holders that want out.
• Operational Overhaul: In conjunction with refreshed tokenomics and an increased fee share for the DAO Treasury, Balancer Foundation argues that operational changes could increase the protocol's from under 4 years to approximately 9 years, assuming the DAO receives ~$1M in annual fees. Key operational changes include:
  • Winding down Balancer Labs;
  • Consolidating operations under a new operational company;
  • Reducing team headcount from 25 to 12.5 full-time-employees; and
  • Reducing the new operating company's by 34% to $1.9M.
• Token Impacts: BAL traded flat today despite the consequential news, registering an inconsequential 1.6% gain at the time of writing. The former DeFi darling's market capitalization is down nearly 99% from its May 2021 all-time highs.