Balancer DAO has begun reviewing a plan to compensate liquidity providers affected by a major smart contract exploit that resulted in the theft of over $110 million from Balancer v2 vaults. This incident marks the third significant security breach for the protocol.
Following the attack, the protocol’s total value locked (TVL) dropped by nearly two-thirds, highlighting the severity of the exploit.
According to a DAO member known as Xeonus, the proposed plan involves reimbursing LPs in the same tokens they held at the time of the hack. Recovered assets span multiple networks, including Ethereum, Polygon, Base, and Arbitrum, and include tokens such as WETH, rETH, WPOL, MaticX, and other positions.
Compensation will be distributed proportionally based on each pool’s share, and DAO is currently finalizing the application process for claims.
The plan also outlines rewards for “white hat” hackers who assisted in recovering funds, following the previously adopted Safe Harbor agreement. Under this framework, the maximum reward per incident is capped at $1 million, and recipients must undergo KYC checks and sanction screenings. A few anonymous contributors on Arbitrum declined to reveal their identities and will not claim rewards.
Following the November 3, 2025 attack, portions of the stolen funds were returned through efforts by the Balancer team and external researchers. Additional assets totaling $19.7 million in osETH and osGNO were recovered by StakeWise and will be distributed separately. Another $4.1 million was returned with the help of Certora, though the company is not eligible for rewards due to existing service agreements.
The DAO is also considering updates to the claims submission process. Users seeking compensation may need to accept updated Balancer terms of use. If approved through a DAO vote, compliance with these new conditions will be mandatory prior to receiving any payments.
The exploit has delivered another blow to the Balancer ecosystem. TVL fell from $775 million to $258 million, while the BAL token lost roughly 30% of its value. The proposed payouts aim to partially offset LP losses, though the recovered assets remain far below the total damage.
This incident follows other major hacks in the crypto space, such as the Upbit breach, which resulted in a $36 million asset theft.
