Balancer Calls Liquidity Providers to Withdraw $6.3M Funds at Risk

Balancer, a decentralized exchange platform, has asked its liquidity providers (LPs) to withdraw their funds from five pools over concerns of a possible exploit. These pools hold a combined total of $6.3 million.

According to its January 6 announcement on Twitter, this was part of a potential bug or exploit that the team is trying to fix.

In trying to fix the issue and prevent the loss, the protocol has deployed an emergency DAO that sets its protocol cost in other pools to zero. This means the pool will continue to accrue swap fees but the protocol will not take its cut from them.

However, since the emergency measures were not possible on these five pools it has therefore alerted liquidity providers to withdraw their funds as quickly as possible to prevent loss.

The affected pools include DOLA/bb-a-USD, bb-am-USD/miMATIC, It’s MAI life, Smells Like Spartan Spirit, and Tenacious Dollar. All of these pools are located on Ethereum, Polygon, Fathom, and Optimism.

With $3.6 million locked, the DOLA/bb-a-USD is currently the largest of the pools, followed by Tenacious Dollar with $1.6 million, It’s MAI life holds $1.1 million while bb-am-USD/miMATIC and Smells Like Spartan Spirit holds $9,000 each.

The decision was approved by 4 of its 7 emergency multisig comprising Blabs Engineers and Balancer Maxis as it said the move was necessary to prevent issues of which it will provide more details shortly.

Balancer Deployed on Optimism

Recall that earlier in June, the DeFi protocol went live on Optimism, an Ethereum layer2 scaling solution to improve user functionality. The deployment signals the protocol’s belief that layer2 scaling solutions will be beneficial in decreasing transaction prices and network congestion according to Balancer Labs CEO Fernando Martinelli.

Balancer (BAL) is an automated market maker built on the Ethereum blockchain that allows users to trade up to eight different tokens in pairs in any ratio. The protocol is governed by the Balancer (BAL) token. These tokens are provided by liquidity providers, who are compensated for their services.