Yeliz Akmaca 
Balancer, one of the leading protocols in the DeFi ecosystem, has faced one of the largest attacks in recent years. In the exploit targeting Balancer’s V2 pools, the total amount drained from the platform exceeded $116.6 million. Some analyses even estimate the losses to be as high as $128 million. This incident has sparked widespread discussions around the question: “What is the Balancer hack?”
Main Components of the Attack
According to Arkham and other on-chain analysts, the stolen assets primarily consisted of two categories:
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Liquid Staked Ethereum (LSETH) derivatives, particularly wstETH and osETH,
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WETH (Wrapped Ether).
The high liquidity of these assets enabled the attacker to quickly convert them into other forms without attracting immediate attention.
How the Hacker Moved and Laundered the Funds
On-chain tracking revealed a three-stage strategy:
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Consolidation of Funds
The stolen wstETH, osETH and WETH were first gathered into several primary collection wallets linked to the attacker. -
Asset Swaps via DEXs
The attacker then swapped these LSETH derivatives and WETH into ETH using decentralized exchanges. This move helped consolidate value into a single asset type, making it easier to manage and harder to trace. -
Distribution Across New Wallets
The converted ETH was transferred into a large number of newly created wallets. This “distribution network” is a common laundering technique designed to make tracking harder for investigators and blockchain analytics firms.
A Multi-Chain Security Breach
The attack was not limited to the Ethereum network. Balancer pools across Arbitrum, Base, Optimism, and Polygon were also affected. Liquidity providers saw sudden drops in pool balances, and many users rushed to revoke token approvals from Balancer smart contracts.
Balancer’s Response
In response to the exploit, the Balancer team took the following actions:
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Paused all affected V2 pools that could be secured via emergency controls,
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Advised liquidity providers to revoke token approvals and withdraw funds,
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Offered up to 20% white-hat bounty if the stolen funds are returned,
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Initiated a comprehensive post-mortem investigation and legal action alongside blockchain forensic experts and law enforcement.
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