Balancer exploit shakes DeFi as $128 million vanishes

For years, Balancer was one of the most reliable institutions of DeFi, a protocol that had survived many markets, audits and integrations without scandal.

However, that credibility collapsed on November 3, when blockchain security firm PeckShield reported that Balancer and several of its forks were under active exploitation that spread across multiple chains.

Within hours, more than $128 million was gone, leaving a trail of drained pools, frozen protocols and shaken investors.

PeckShield data showed the platform protocol ethereum suffered the heaviest loss of about $100 million. Berachain followed with $12.9 million, while DecisionBase, and smaller forks like Sonicoptimism, and Polygon recorded lower but still significant thefts.

When the leak developed, Balancer acknowledged a “potential exploit impacting Balancer v2 pools,” saying that its engineering and security teams were investigating the issue with high priority.

However, the recommendation did little to slow down the retreats between integrators and forks.

By the end of the day, DeFiLlama data showed that the total value of Balancer (TVL) was down 46% to about $422 million from $770 million at press time.

What happened?

Preliminary forensics from blockchain security firm Phalcon indicated that the attack targeted Balancer Pool Tokens (BPT), which represent user shares in liquidity pools.

According to the firm, the vulnerability stems from how Balancer calculated pool prices during batch swaps. By manipulating that logic, the exploiter has distorted the internal price feed, creating an artificial imbalance that allows them to withdraw tokens before the system corrects itself.

Crypto analyst Adi he wrote: :

“Improper authorization and callback management allowed the attacker to bypass the safeguards. This allowed unauthorized exchanges or balance manipulations in interconnected pools, draining assets in quick succession (within minutes).

Meanwhile, Balancer’s composable vault architecture, which has long been praised for its flexibility, amplified the damage. Because the vaults could reference each other dynamically, the distortion rippled through interconnected pools.

Interestingly, Coinbase Conor Grogan he indicated that the attacker’s approach suggested professional sophistication.

Grogan noted that the attacker’s address was initially funded with 100 ETH from Tornado Cash, implying that the funds likely originated from previous exploits.

“People don’t usually park 100 ETH in Tornado Cash for fun,” he he wrotesuggesting that the transaction pattern reflects an experienced and previously active hacker.

DeFi trust is collapsing

While the exploit itself was technical, its impact was psychological.

Balancer was long considered a conservative place for liquidity providers, a place to park assets and earn a modest and stable return. Its longevity, audits, and integrations into major DeFi platforms have fostered the illusion that resilience equals security. The Nov. 3 breach shattered that narrative overnight.

Lefteris Karapetsas, founder of cryptographic platform Rotki, called it’s “a collapse of trust” and not just a DeFi platform hack.

He denounced the fact that:

“A protocol live from 2020, verified and widely used, can still suffer a near-total loss of TVL. It’s a red flag for anyone who believes that DeFi is ‘stable.’

This reaction captured the broader sentiment. In a market that prizes self-custody and verifiable code, trust had quietly replaced trust as the hidden foundation of DeFi.

Balancer’s failure showed that even mathematical systems are vulnerable to unforeseen complexity.

Robdog, the pseudonymous developer of Cork Protocol, he said: :

“While [DeFi] Foundations are becoming more and more secure, the sad reality is that smart contract risk is all around us.

Implications for DeFi

The Balancer exploit hit a soft spot for decentralized finance, breaking a brief period of calm. In October, total losses from hackers fell to a year-low of just $18 million, according to PeckShield.

However, with a single incident in November, the figure has already exceeded more than $120 million, making it the third worst month for DeFi breaches in 2025.

Meanwhile, this attack highlights a fundamental paradox at the heart of DeFi: composability, the feature that allows protocols to connect and build on each other, also amplifies systemic risk.

When a core protocol like Balancer breaks, the impact instantly ripples through the networks that depend on it.

In Berachain, validators on break block production to prevent contagion. Other protocols followed with temporary suspensions of lending and bridging functions.

These quick reactions limited the losses, but they also underlined a wider truth that shows that DeFi operates without the coordination mechanisms that stop traditional finance.

In this area, there are no regulators, central banks, or mandated backstops. Instead, crisis management depends heavily on developers and auditors working in tandem, often within minutes, to contain the fallout.

Considering this, Robdog said:

[This is] a good reminder because we need to develop a better risk management infrastructure”.

Beyond the immediate technical loss, the damage to trust can be more difficult to repair.

Every major exploit erodes confidence in DeFi’s promise of self-regulating code. For institutional investors considering exposure to the industry, repeated failures signal that decentralized markets remain experimental.

Karapetsas said:

“No serious capital allocates in systems that are so fragile.”

This perception is already shaping policy in major economies around the world.

Suhail Kakar, a prominent web3 developer, highlighted a sobering reality following the exploitation of the Balancer: even many high-profile security audits cannot guarantee security in DeFi.

As he noted, Balancer has undergone more than ten audits, with its core vault contract reviewed by several independent firms; yet, the protocol has also suffered a major breach.

Kakar’s point highlights a growing sentiment in the industry that “audited by X” is no longer a mark of infallibility; rather, it reflects the inherent complexity and unpredictability of decentralized systems where even well-tested code can carry unseen vulnerabilities.

Authorities in the United States are developing frameworks that will introduce regulations on DeFi protocols. Industry observers expect the Balancer to accelerate these efforts, as policymakers grapple with the growing risk of continued integration between crypto and the traditional financial industry.