Balancer’s $128M Exploit Explained, How a Small Flaw Shook DeFi and Forced Berachain’s Emergency Fork

The world of decentralized finance often promises open access, smart automation, and high-yield opportunities. At the same time, it carries real risks because everything runs through code that must work perfectly at all times. In early November 2025, this balance was tested once again when Balancer, one of the most well-known platforms for automated liquidity pools, was struck by a major exploit that drained around $128 million across several blockchains. What made this even more significant was how the issue forced Berachain, a newer blockchain that uses Balancer’s technology, to stop its network and perform an emergency fork to protect its users. The incident served as a reminder that even widely audited systems can fail when a small oversight slips through.

Balancer V2 operates with a core vault that manages the movement of tokens for swaps and liquidity pools. This vault is designed to be extremely efficient, but it depends on precise access rules to ensure only approved actions can take place. The exploit occurred because a part of the access control system wasn’t as strict as needed. This allowed attackers to pull assets from the vault without proper permission. They moved quickly, draining wrapped tokens and staking derivatives, converting them, and then moving the funds across different networks.

Even though Balancer had undergone more than ten audits, this flaw still remained hidden. It highlights a common challenge in DeFi, when systems become more complex and connect with multiple blockchains, even minor weaknesses can turn into major problems. The exploit spread across Ethereum, Arbitrum, Base, Optimism, Polygon, and Berachain because these networks use versions or forks of Balancer’s design. Once the weakness was found in one place, it became possible to repeat the attack across the others.

Impacts approximated from PeckShield and team updates; status as of Nov 4, 2025.

Berachain faced the greatest damage. Since it is built using Balancer’s code, the vulnerability reached it quickly. The project team responded by immediately halting the chain and rolling back to an earlier block so the system returned to a safe state before the attack began. This type of action is unusual, especially for larger networks, but for Berachain still in its pre-mainnet stage, it was the fastest way to prevent further losses. The rollback protected tens of millions of dollars in liquidity that would have otherwise been at risk, and the development team also began removing the affected vault code before continuing with their mainnet plans.

Across other networks, the impact varied. Ethereum saw the largest individual drain, while other chains experienced smaller but still significant losses. Balancer began working with security groups to trace funds and opened a large reward for anyone who helps recover stolen assets. Some of the stolen funds were tracked through mixing services and exchanges, though full recovery remains uncertain. Users with frozen funds on affected networks are being guided through claim processes that may take days or weeks, and some protection may come through DeFi insurance platforms that cover part of the losses.

This exploit also raises broader questions about the future of DeFi security. More protocols than ever are undergoing audits, yet the number of exploits continues to rise each year. Developers and researchers argue that security checks must become more dynamic and continuous rather than relying only on scheduled audits. Insurance services are also becoming an important safeguard for everyday users, helping reduce the financial damage when a protocol fails. At the same time, many experts advise users to spread their liquidity across several pools and avoid placing too much capital into any single system.

Despite the severity of the breach, events like this do push the industry to improve. Balancer is now adding stronger safety features, including limits that automatically pause withdrawals if sudden abnormal activity takes place. Berachain’s quick fork strengthens its system before launch and may help build confidence ahead of its mainnet debut. As DeFi continues expanding across many chains, the lessons learned from incidents like this guide both developers and users toward safer participation.

The Balancer exploit and Berachain fork reveal how quickly problems can emerge in interconnected DeFi systems, but they also show how fast coordinated action can reduce further harm. With better tools, clearer safeguards, and stronger user awareness, the path forward for DeFi can still move toward greater resilience and trust.