Balancer Community Proposes Fund Distribution Plan Post-Hack Recovery

Summary: Two members of the Balancer protocol community have proposed a plan to distribute part of the funds recovered from the hack that resulted in a $116 million loss in November. Out of this amount, around $28 million was salvaged, with specific guidelines on how the $8 million recovered through white hat hackers should be allocated among affected liquidity pools.

Key Takeaways:

The Balancer community has put forth a distribution plan for $8 million recovered from a major hack.
The proposal suggests distributing funds only to the specific liquidity pools that suffered losses.
Reimbursements will be issued in the original tokens lost to prevent price discrepancies.
Despite numerous audits, the Balancer protocol was still vulnerable to this exploit, sparking discussions about the effectiveness of security audits.

Balancer community proposes plan to distribute funds recovered from hack

Distribution Proposal from Balancer Community

On Thursday, two participants from the Balancer protocol community submitted a proposal detailing how to distribute a portion of the funds that were recovered from the protocol's $116 million exploit in November. Out of the total, about $28 million was recovered by white hat hackers, internal rescuers, and StakeWise, which is an Ether liquid staking platform. However, the proposal focuses only on the $8 million that was retrieved by white hat hackers and internal rescue teams. The nearly $20 million recouped by StakeWise will be handled separately, benefiting its users.

Cybercrime, Cybersecurity, Hacks
Balancer community proposal to distribute recovered funds. Source: Balancer

The proposal suggests that reimbursements should be non-socialized. This means funds will only go to the specific liquidity pools that lost assets, distributed on a pro-rata basis in line with each holder's proportion within the liquidity pool, represented by Balancer Pool Tokens (BPT). The authors also recommend that reimbursements be in-kind, suggesting that victims of the hack receive payments in the same tokens they lost to prevent price mismatches between various digital assets.

According to Deddy Lavid, CEO of the blockchain cybersecurity firm Cyvers, the Balancer hack was one of the “most sophisticated” attacks in 2025. This highlights the ongoing necessity for heightened security measures as threats in the cryptocurrency world become more advanced.

Related: Balancer makes last appeal to hacker behind $100M+ exploit

Importance of Security Audits

Despite undergoing 11 audits by four different blockchain security firms, Balancer's smart contracts still encountered a breach, raising doubts among users concerning the effectiveness of such audits in assuring code safety.

Cybercrime, Cybersecurity, Hacks
Balancer code audits. Source: GitHub

Following the incident, Balancer published a post-mortem report on November 5, revealing that the root cause of the hack stemmed from a sophisticated exploit targeting a rounding function utilized in EXACT_OUT swaps within its Stable Pools.

The rounding function was intended to round down when inputting token prices, but the hacker succeeded in manipulating the calculation so that the values rounded up instead. By utilizing this flaw alongside a batched swap—executing multiple actions within a single transaction—the attacker drained funds from Balancer’s pools.

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