Balancer to repay liquidity providers $8M in recovered funds after $128M v2 exploit
A new proposal on Balancer’s governance forum sets the stage for how the protocol plans to handle the next phase of its recovery effort.
- Balancer has proposed a framework to distribute $8M in rescued assets after the V2 exploit.
- Whitehats would receive 10% bounties, while LP repayments would be pro-rata and paid in-kind.
- The Nov. 3 attack drained over $128M, prompting coordinated recoveries and community-wide mitigation efforts.
Balancer has outlined a reimbursement plan that would return roughly $8 million in rescued assets to liquidity providers affected during the v2 exploit.
The Nov. 27 proposal is the protocol’s first concrete step toward settling losses after one of decentralized finance’s largest breaches this year.
How the repayment plan would work
The proposal details how funds recovered by whitehat responders and internal rescue teams will be distributed. According to Balancer (BAL), the $8 million was secured across several networks after the exploit, while an additional $19.7 million tied to osETH and osGNO is being processed separately by StakeWise.
Under the plan, whitehat actors who intervened during the attack would receive bounties equal to 10% of the assets they helped recover, paid in the same tokens they returned.
Balancer’s Safe Harbor Agreement requires full identity verification, KYC screening, and sanctions checks before payouts are made. The foundation has already cleared compliance for the whitehats involved, though identities will remain confidential.
The proposal also outlines how internally recovered funds, secured in coordination with Certora, will be treated. Because Certora acted under an ongoing service agreement, these recoveries fall outside the bounty program. Instead, the tokens will be returned directly to the affected pools.
Liquidity providers would receive repayments on a pro-rata basis, matched to their BPT holdings at snapshot blocks taken just before the first exploit transactions on each network.
The distribution would be non-socialized, meaning each pool’s recovered assets go only to LPs in that same pool. Payments would also be made in-kind, giving users the same tokens that were rescued.
A claim interface will be built, and users will need to agree to Balancer’s terms before receiving funds. Any unclaimed assets after the claim window closes would be redirected through a later governance vote.
A look back at the November exploit
The attack on Nov. 3 drained more than $128 million across Ethereum and multiple layer-2 networks, exploiting a precision-loss flaw in Balancer’s v2 pool invariant. The attacker manipulated the token balances, creating a loop of profitable arbitrage that emptied the pools in just a few minutes.
While most stolen assets were quickly moved through mixers, coordinated whitehat responses and protocol-level interventions prevented deeper losses. StakeWise recovered about $19 million in osETH shortly after the incident, and Balancer paused affected pools to contain further damage.
The new reimbursement plan now moves to community review, setting up the next governance vote as Balancer works to close one of its most disruptive chapters of 2025.
