The Balancer ecosystem is attempting to turn one of the darkest moments in its history into a moment of collective repair.
Key Takeaways
- Balancer community members have proposed a plan to distribute $8M of the assets recovered from the $116M attack.
- Compensation would be isolated to the pools that were actually exploited and distributed proportionally by BPT ownership.
- Repayments would be made in the same assets that were stolen, not converted replacements.
Rather than focusing on the attack itself, community members are now negotiating how to allocate the portion of stolen assets that has been recovered — a process that will determine whether users regain confidence in the project.
Turning Recovery Into Restitution
When the November exploit wiped more than $100 million from Balancer’s liquidity pools, many assumed the damage was permanent. Weeks later, coordinated rescue efforts retrieved a chunk of the stolen assets — not enough to erase the event, but enough to justify a debate on how the protocol should compensate affected users.
Of the total $116 million that vanished during the exploit, around $28 million has been secured. The newly filed governance proposal concerns only the $8 million recovered through white hats and internal responders, while the ~$20 million secured via StakeWise will be distributed separately by that platform.
A Compensation Model Built on Precision, Not Averaging
Rather than spreading recovered funds across the entire protocol, the submission pushes for a targeted repayment system. Under the model, losses are not socialized — each liquidity pool affected by the hack would receive its own restitution, and each user’s compensation would match their proportional share of the pool based on their Balancer Pool Tokens.
There is another strict requirement: victims would be reimbursed in the same assets that were stolen, not in stablecoins or swapped equivalents. The thinking is simple — if the attack took A, the repayment should also be A, avoiding distortions caused by price fluctuations.
The Exploit Left a Mark on Decentralized Finance
The reimbursement debate has reignited conversations about how a protocol with so many audits could still collapse under one weakness. Balancer’s contracts had passed 11 audits by four security companies, yet the attacker found a flaw that slipped through every review.
According to Balancer’s post-mortem, the hacker exploited the rounding mechanism used in EXACT_OUT swaps in Stable Pools. The function originally rounded amounts downward, but inputs were manipulated so that invalid upward rounding occurred instead. This distortion became even more dangerous when paired with a batched swap, allowing multiple draining actions in a single transaction.
Security experts, including Cyvers CEO Deddy Lavid, have since described the incident as one of the most technically advanced hacks of the year — a reminder that audit quantity does not equal safety.
Closing the Loop — If the Vote Passes
The governance vote will determine whether the outlined plan becomes the official path to compensation. For users who watched their liquidity disappear, the proposal represents the first concrete step toward resolution — even though the majority of the original funds remain unrecovered.
Whatever the result, the Balancer exploit has already reshaped how DeFi projects think about security — not only in preventing attacks, but in deciding how to respond when they do happen.
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Alex is an experienced financial journalist and cryptocurrency enthusiast. With over 8 years of experience covering the crypto, blockchain, and fintech industries, he is well-versed in the complex and ever-evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His approach allows him to break down complex ideas into accessible and in-depth content. Follow his publications to stay up to date with the most important trends and topics.
Source: https://coindoo.com/balancer-community-unveils-plan-to-compensate-users-after-116m-hack/