Balancer hacked for nine figs this morning
Translation: even if losses are contained to Balancer (+ parties with direct exposure) near term, the ONCHAIN COST OF CAPITAL JUST SPIKED UP IN A NONLINEAR WAY
You're probably underestimating the ripple effect this will have across crypto
As a reminder, Balancer:
> launched its v2 contracts in 2021
> grew to $3B TVL ($1B in Oct'25)
> is audited by top firms (OpenZeppelin, Trail of Bits, Certora, ABDK Consulting)
Vitalik posted this chart a month ago of declining L1 DeFi losses as a % of TVL. As losses lowered, the market taught crypto investors that single digit yields (eg aave at 4%, ethena/maple at 5-6%) were profitable
In EV3's Q3 investor letter, we wrote the following disclaimer about onchain stablecoin yields:
"A high-value smart contract hack in 2025, especially after several years of declining losses, would be even more likely to cause an exogenous shock on onchain cost of capital and trigger systemic deleveraging across crypto."
We are likely to see this deleveraging happen this week and a massive drawdown in stablecoin TVL farms
Most of the yields earned by these strategies cratered on 10/10 and have yet to recover. Now, expected losses from hacks has risen dramatically as well. The true risk-adjusted spread for stablecoin farms is now minimal or potentially even negative, depending on if you think this hack is a harbinger of what's to come
Stablecoin looping is in for a rough week imo
Here's everything you need to know about the Balancer Hack:
1. The attack targeted Balancer's V2 vaults and liquidity pools, exploiting a vulnerability in smart contract interactions. Preliminary analysis from on-chain investigators points to a maliciously deployed contract that manipulated Vault calls during pool initialization.
2. Improper authorization and callback handling allowed the attacker to bypass safeguards. This enabled unauthorized swaps or balance manipulations across interconnected pools, draining assets in rapid succession (within minutes).
3. The exploiter initiated a series of transactions starting with a key Ethereum mainnet tx (0xd155207261712c35fa3d472ed1e51bfcd816e616dd4f517fa5959836f5b48569), which funneled assets to a new wallet under their control. Funds were then consolidated, likely for laundering via mixers or bridges.
4. Balancer's composable design where pools interact heavily amplified the flaw. Similar issues have plagued AMMs before, often tied to how they handle deflationary tokens or pool rebalancing.
Full forensic details are still emerging, with auditors like PeckShield and Nansen involved. No evidence of a private key compromise; this was a pure smart contract exploit.
Here's roughly the stolen assets:
>Ethereum: ~$70M+ drained (main hit)
>Base & Sonic: ~$7M combined
>Other chains: ~$2M+
>Main stolen assets: WETH, wstETH, osETH, frxETH, rsETH, rETH — roughly $110–116M total.
Here's what you should do If you're exposed:
1/ Withdraw Immediately: Pull funds from Balancer V2 pools if possibleavoid affected ones.
2/ Revoke Approvals: Use Revoke, DeBank, or Etherscan to cancel smart contract permissions for Balancer addresses.
3/ Monitor Wallets: Track via Etherscan or Dune Analytics for suspicious activity.
4/Stay Informed: Follow lookonchain, PeckShieldAlert, and Balancer for updates.
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