Balancer Abandons Corporate Structure After $128 Million Exploit

Hi! In today’s edition:

• 🏗️ Balancer shuts down its corporate entity after $128 million exploit

• 🎯 Kalshi and Polymarket introduce insider trading controls amid regulatory pressure

• 🏦 Aave V4 passes first governance vote with 100% support

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Balancer Labs Shuts Down After $128 Million Exploit

Balancer Labs, the corporate entity behind the Balancer DEX, is shutting down. Not the protocol — the company. Co-founder Fernando Martinelli announced Monday that after November's $128 million exploit, the corporate wrapper had become a legal liability with no revenue to justify carrying it. Dissolving it, he argued, was the responsible move.

What replaces it: a leaner Balancer operating entirely through its DAO and foundation. BAL emissions end, veBAL governance winds down, and the DAO captures 100% of protocol fees instead of 17.5%. A BAL buyback gives holders an exit if they want one. Core staff move to a new entity called Balancer OpCo, pending a governance vote.

Kalshi and Polymarket Roll Out Insider Trading Controls

Both Kalshi and Polymarket moved Monday to get ahead of Congress, rolling out new insider trading controls as senators introduced a bill that would ban sports betting contracts from their platforms entirely. Six different bills targeting prediction markets have been filed in Washington this year. The compliance push is less about ethics and more about keeping a $18 billion monthly market alive.

Kalshi's moves are the most visible: preemptive screening blocks political candidates from trading their own elections, an IC360 partnership locks out athletes and coaches, and a new whistleblower button lets users flag suspicious trades in real time. Polymarket updated its rulebook and disclosed a Palantir partnership to surveil sports markets.

The platforms have a key backstop: CFTC Commissioner Michael Selig has claimed jurisdiction over prediction markets, not Congress. That fight is still ahead.

Aave V4 Clears First Governance Vote with 100% Support 

Aave's long-awaited V4 upgrade cleared its first governance hurdle Monday with 100% support, a striking result for a proposal that had fractured the protocol's leadership just weeks ago. Two major contributors, Bored Ghosts Developing and Aave Chan Initiative, announced departures after Aave Labs pushed to deprioritize the existing V3 protocol in favor of V4. Labs later backed down on the most aggressive provisions.

V4 introduces a hub-and-spoke model that lets different lending markets share a unified liquidity pool while maintaining separate risk parameters, a design meant to expand revenue without fragmenting deposits. Aave V3 currently holds more than $25 billion in user deposits. V4 will launch conservatively before the DAO expands it.

A binding vote follows in the coming weeks. If it passes, Aave's biggest upgrade in years goes live on Ethereum.

• 🌍 Bitcoin climbed past $71,000 after President Trump announced a five-day pause on military strikes against Iranian energy infrastructure, triggering risk-on sentiment across markets as crude oil fell over 10% and prediction market odds for a move to $84,000 jumped to 49%.

• 🎒 Backpack Exchange launched its BP token on Solana with 250 million tokens airdropped to existing users and Mad Lads NFT holders, allocating nothing to founders, team, or investors at inception, with long-term stakers eligible to convert BP into company equity.

• 📋 Federal prosecutors questioned the authenticity of a letter purportedly from imprisoned FTX founder Sam Bankman-Fried requesting a legal extension, citing FedEx tracking data pointing to Palo Alto rather than his prison, as his parents separately called his 25-year sentence "politically motivated" on CNN.

• 🔵 Bitmine, Tom Lee's Ethereum treasury company, purchased 65,341 ETH worth roughly $138 million last week, its third consecutive week of accelerated buying, bringing total holdings to 4.66 million ETH as Lee said he believes the asset is in "the final stages of the mini-crypto winter."

• 🟠 Strategy launched a new $42 billion at-the-market equity program split between $21 billion in common shares and $21 billion in STRC preferred stock, restoring its full bitcoin acquisition firepower after drawing down earlier programs to purchase 762,099 BTC.

• 🔮 Polymarket CEO Shayne Coplan and Kalshi CEO Tarek Mansour announced 5c(c) Capital, a new venture firm named after the Commodity Exchange Act section governing prediction markets, targeting up to $35 million to back roughly 20 early-stage startups building the data tools, liquidity services, and compliance infrastructure around the prediction market boom.

•  🌐 ParaFi, the Henry Kravis-backed digital asset manager, raised $125 million for a new venture fund focused on stablecoin, tokenization, and institutional on-chain finance, while pulling in an additional $325 million for existing strategies since early 2025, bringing total AUM to $2 billion.

•  🔄 Katana, the Polygon-incubated Ethereum scaling chain, acquired hybrid decentralized exchange IDEX to serve as the infrastructure backbone for its new Katana Perps perpetual futures platform, backed at launch by market makers GSR, Selini Capital, and Auros.

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