Balancer Exploit Drains $128M on Ethereum & L2s; Berachain Halts
The Balancer exploit drained $128 million across Ethereum mainnet and multiple layer-2 networks. Attackers manipulated the manageUserBalance function and exploited faulty pool logic via flash loans to execute unauthorized withdrawals on Ethereum, Arbitrum, Optimism, Base, Polygon and Beets DEX forks. Key losses included $70 million on Ethereum and $6 million on Arbitrum. In response, core developers paused all affected pools and deployed security patches to block further unauthorized withdrawals.
Berachain halted its production chain to protect $12 million in user funds and prepare an emergency hard fork. Yield optimizer Beefy Finance paused Balancer V2 products and pledged user support. Over 20 Balancer V2 forks are under review. Traders saw spikes in volatility for BAL, ETH and other DeFi tokens and are advised to avoid affected pools until full audits conclude. This Balancer exploit underscores the need for tighter smart-contract audits, real-time monitoring and DeFi insurance solutions, which will shape short-term trading opportunities.
Bearish
The exploit severely undermines confidence in Balancer’s smart contracts, leading to immediate selling pressure on BAL and reduced liquidity in affected pools. Short-term market sentiment is negative as traders avoid risk amid audits and patches. In the long term, successful recovery plans and enhanced security measures could restore some trust, but regulatory scrutiny and heightened risk awareness may continue to weigh on BAL’s price and broader DeFi tokens.