Balancer is proposing a major restructuring of its protocol and operations. The proposal signals a shift away from incentive-driven growth toward a leaner, revenue-focused model following its recent exploit and declining economic performance.
Two governance proposals was published on 23 March. They outline a coordinated plan to overhaul the protocol’s tokenomics and reduce operating costs, aiming to achieve long-term sustainability.
Emissions halted, veBAL phased out
At the center of the proposal is a complete overhaul of BAL tokenomics.
Balancer plans to:
- Halt all BAL emissions immediately, ending its liquidity incentive model
- Phase out veBAL, removing fee rewards and economic benefits tied to locked tokens
- Route 100% of protocol fees to the DAO Treasury, replacing the current split across incentives, partners, and veBAL holders
The proposal argues that the current system creates “circular economics,” where incentives cost more than the revenue they generate, while ongoing emissions dilute existing holders.
Under the new model, annual DAO revenue is projected to rise from roughly $290K to $1.22M, as all protocol fees are captured centrally.
Buyback and burn targets up to 35% of supply
To address long-term dilution, the DAO is also proposing a buyback and burn program funded from the treasury.
The plan would allocate up to 35% of treasury holdings [~$3.6M] to repurchase BAL at its net asset value [NAV]. This will potentially remove around 35% of circulating supply if fully executed.
Also, the initiative is designed to provide exit liquidity for holders while reducing supply overhang from years of emissions.
Focus shifts to revenue-generating products
Under the new structure, Balancer will narrow its product focus to areas with proven or high revenue potential, including boosted pools and its reCLAMM system.
The protocol will also review deployments across more than nine chains. Continued support will be limited to networks that generate meaningful revenue, such as Ethereum, Arbitrum, Base, and Gnosis.
Also, non-performing deployments may be deprecated to reduce operational overhead.
Risks remain as incentives are removed
Balancer acknowledged that removing emissions and incentives could lead to a decline in total value locked [TVL], as liquidity providers who relied on rewards may exit.
The shift also reduces the role of veBAL governance. It concentrates operational decision-making within a smaller core team, raising concerns about centralization.
A broader shift in DeFi strategy
The proposal reflects a wider trend across decentralized finance, where protocols are re-evaluating incentive-heavy growth models that rely on token emissions.
Balancer’s approach marks a transition toward a model based on organic revenue, cost discipline, and capital preservation.
Final Summary
- Balancer is proposing a full reset of its tokenomics and operations, ending emissions and cutting costs to move toward a revenue-driven model.
- The overhaul highlights a broader shift in DeFi, as protocols move away from incentive-led growth toward long-term sustainability.
Source: https://ambcrypto.com/balancer-proposes-sweeping-overhaul-to-cut-emissions-slash-costs-and-reset-post-exploit-strategy/
