What is Balancer (BAL) & Why Balancer Got Hacked?

Balancer (BAL) is a decentralized finance (DeFi) protocol and automated market maker (AMM) built on the Ethereum blockchain. 

It allows users to create and manage liquidity pools with multiple tokens in custom ratios, offering greater flexibility than traditional AMMs.

Beyond its innovation, Balancer’s journey also includes lessons on DeFi security — notably the June 2023 hack, when over $116 million was drained in one of the largest DeFi exploits that year. 

This article explains what Balancer is, how it works, and what led to the security breach.

What is Balancer (BAL)?

Balancer is a DeFi protocol that functions as a self-balancing portfolio and decentralized exchange (DEX). It uses smart contracts to enable automated trading and liquidity provision without intermediaries.

Unlike standard AMMs (like Uniswap) that use a fixed 50:50 token ratio, Balancer supports up to eight different tokens per pool with customizable weightings. 

This design makes it possible to build portfolio-style liquidity pools that rebalance automatically as trades occur.

Key Features of Balancer (BAL)

• Customizable Liquidity Pools: Users can create pools with flexible token ratios (e.g., 80/20, 60/40).
• Automated Portfolio Rebalancing: Pool ratios are maintained automatically through smart contract algorithms.
• Low Slippage and Efficient Swaps: Multi-asset pools improve trading efficiency for diversified tokens.
• Governance Token ($BAL): Token holders can propose and vote on protocol upgrades, liquidity incentives, and fee parameters.

Balancer’s core appeal lies in its flexibility and capital efficiency, which have made it a cornerstone in the DeFi ecosystem for liquidity management and token swaps.

Why Balancer Got Hacked

In June 2023, Balancer (BAL) was hit by a major flash loan exploit that resulted in a loss of approximately $116.6 million. 

The attack exploited vulnerabilities in the protocol’s smart contracts and pool logic, allowing the attacker to manipulate prices and extract liquidity.

How the Hack Happened

1. Flash Loan Execution: The attacker borrowed a large sum via flash loans — a DeFi feature allowing instant borrowing and repayment within a single transaction.
2. Price Manipulation: They exploited Balancer’s pool pricing logic, causing token prices to shift rapidly.
3. Liquidity Drain: By triggering contract vulnerabilities, they withdrew more assets than deposited, effectively draining multiple pools.
4. Contract Weakness: Certain pools were not upgraded to newer, safer versions, leaving them exposed.

The Balancer team reacted quickly by pausing affected pools, deploying security patches, and engaging with auditors to analyze the exploit. 

The event underscored the high-risk nature of DeFi systems relying on complex smart contracts.

Lessons from the Balancer Hack

The 2023 Balancer exploit highlighted several important takeaways for the DeFi community:

• Continuous Auditing is Crucial: Even well-audited contracts can contain overlooked vulnerabilities.
• Protocol Upgrades Must Be Timely: Delays in migrating liquidity to safer contracts can create exploit opportunities.
• Flash Loan Attacks Are a Persistent Risk: Many DeFi exploits leverage flash loans to amplify vulnerabilities.
• User Awareness: Liquidity providers must assess pool risks and monitor security advisories.

Since the hack, Balancer has strengthened its contract framework and introduced more transparent security updates for liquidity providers.

Balancer (BAL) Market Overview – November 2025

As of November 2025, Balancer (BAL) trades around $0.88 to $0.95, with moderate volatility. The token remains an important governance asset for DeFi enthusiasts.

Market indicators:

• Current Price: ~$0.90
• 24-Hour Change: -1.2%
• Market Cap: Approximately $49 million
• Trend: Consolidation phase after prior declines

Despite the 2023 setback, Balancer’s protocol continues to operate successfully, maintaining relevance as a flexible AMM platform in the DeFi landscape.

Read more: How to Buy Balancer: Learn all about Buy BAL - Buy Balancer (BAL) Guide

Conclusion

Balancer (BAL) remains one of the most innovative AMM protocols in decentralized finance, enabling customizable, multi-asset liquidity pools. 

However, its 2023 hack serves as a reminder of the security challenges in DeFi and the importance of continuous upgrades and audits.

While the protocol has recovered from the incident, investors and liquidity providers should remain cautious and stay informed about updates from the Balancer development team.

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FAQ

What is Balancer (BAL)?

Balancer is a decentralized automated market maker (AMM) protocol that allows users to create customizable liquidity pools with up to eight tokens and varying ratios.

Why was Balancer hacked in 2023?

Balancer was hacked due to a flash loan exploit that targeted vulnerabilities in its smart contracts and pricing logic, allowing attackers to drain funds.

How much was lost in the Balancer hack?

Approximately $116.6 million worth of assets were drained from several Balancer liquidity pools during the attack.

What steps did Balancer take after the hack?

The team patched vulnerabilities, paused affected pools, and collaborated with auditors to enhance protocol security.

Is Balancer safe to use now?

Yes, Balancer has implemented additional security measures and regular audits since the 2023 incident, though all DeFi platforms carry inherent risk.