How the Balancer Protocol Compensation Plan Will Refund LPs

Balancer Protocol Compensation Plan Released to Refund Hack Victims

After one of the largest DeFi breaches of the year, On 27 November, Balancer finally published its official Balancer Protocol Compensation plan. The update comes weeks after hackers drained over $116 million from Balancer’s v2 vaults, leaving thousands of liquidity providers anxious about whether they would recover anything. 

Now, as announced on X Account Balancer DAO released a clear roadmap showing how rescued funds will be redistributed, how whitehats will be rewarded, and what steps LPs must follow to claim their share. 

Source: X (formerly Twitter) 

Recovery Framework After November 3 Attack

On November 3, 2025, the platform was attacked across several chains, including Ethereum, Polygon, Arbitrum and Base. 

A mix of whitehat actors and internal rescue teams managed to recover around $8 million, while StakeWise separately handled another $19.7 million in osETH and osGNO. 

The new compensation plan follows weeks of user pressure and is built around transparency, community input, and network-specific repayment rules. 

Balancer protocol shared the proposal on its forum, stating it aims to keep users “at the center of this process.” 

How Whitehat Rescues and Bounties Will Work

Under the Safe Harbor Agreement previously approved by Balancer DAO, whitehats who helped save assets will receive a 10% bounty, paid in the same tokens they rescued. 

• This avoids price swings and keeps accounting simple. 

• All whitehats must complete KYC, identity checks, and sanctions screening before receiving rewards.

• Some rescuers on Arbitrum waived their bounty by staying anonymous. 

• In total, external whitehats recovered about $3.85 million in assets across multiple networks.

Meanwhile, an internal rescue operation led by Certora recovered another $4.1 million from metastable pools. These internal rescues do not qualify for bounties.

How LPs Will Be Repaid Under the New Plan

The center of the Compensation plan is how liquidity providers will be reimbursed. They confirmed that the distribution will be:

• Non-socialized: Only LPs in a pool receive its recovered funds

• Pro-rata: Based on BPT holdings at specific snapshot blocks

• Paid-in-kind: Users receive the same tokens that were rescued

This prevents mixing assets across pools and respects the structure of platform’s vaults. 

Snapshot blocks have been finalized for Ethereum, Polygon, Base, Arbitrum and Optimism. Once the claim contracts go live, LPs must confirm consent to platform’s terms before receiving their tokens. 

Claiming Process and Dormant Funds

• The platform will launch a claim portal, allowing LPs to connect wallets and retrieve their compensation. 

• Multi-sig or contract wallets may need extra support and can contact through the official email.

• A 180-day claim window will apply. 

• After that, unclaimed assets will be classified as dormant and will require a separate governance decision for redistribution.

A Step Toward Rebuilding Trust

This Balancer Protocol Compensation plan comes at a time when DeFi confidence is shaken. The earlier discovery that the attacker may have used AI-generated code added even more concerns. But with this structured plan, they hope to rebuild trust, strengthen user safety, and show that even after a major breach, community-driven recovery is possible. 

Disclaimer: This article is for informational purposes only and not financial advice. DeFi protocols carry smart contract and market risk. Always do your own research before interacting with any protocol.