Balancer identifies rounding error as root cause of multi-chain DeFi exploit

DeFi protocol Balancer has published its preliminary incident report on the Nov. 3 exploit that drained tens of millions from its Composable Stable Pools (CSPs) across multiple networks, including Ethereum, Base, Avalanche, Arbitrum, Optimism, Gnosis, Polygon, Berachain, and Sonic.

As The Block previously reported, the decentralized automated market maker (AMM) and liquidity platform suffered massive outflows from its vault. Initial estimates of the loss quickly rose from around $70 million to over $128 million within a few hours, blockchain analytics providers like Nansen and Peckshield reported.

According to Balancer, its security partner Hypernative first detected the suspicious activity early Monday. Several contributors and whitehat responders, such as SEAL 911, BitFinding, and StakeWise, were then contacted to help stem the bleed.

Root cause: rounding flaw in swap logic

In its preliminary report, Balancer attributed the exploit to a rounding error in the upscale function for EXACT_OUT swaps within the v2 vault’s batchSwap feature. This function allows users to combine multiple swap operations into a single transaction to save gas.

Attackers exploited how deferred settlement was implemented in composable pools, which allowed liquidity to fall below minimum thresholds, the team explained. Specifically, the bug occurred when non-integer scaling factors caused the system to round down during specific calculations, creating small discrepancies that the attacker leveraged to manipulate balances and drain value.

In many instances, funds were first redirected into the Balancer Vault’s internal balances before being withdrawn through follow-up transactions. The bug primarily affected Composable Stable v5 pools with expired pause windows, while Hypernative’s emergency automation automatically paused v6 pools.

“The incident was limited to Composable Stable Pools on Balancer v2 and its forks on other chains such as BEX and Beets,” Balancer wrote. “Balancer v3 and all other pool types remain unaffected.”

Meanwhile, CSPv6 pools were automatically transitioned into recovery mode under emergency controls.

Multi-chain impact and recovery

Balancer said the attack spanned several networks and forks, including BEX on Berachain, Beets on Sonic, and Gnosis-based deployments. However, ecosystem partners initiated emergency actions to contain the fallout. StakeWise DAO recovered approximately $19 million in osETH and $1.7 million in osGNO, roughly 73.5% of the stolen osETH. Berachain validators halted the network to perform an emergency hard fork addressing BEX’s v2 exposure, which was completed on Nov. 4.

Also, Sonic Labs froze suspected attacker addresses, restricting fund movements tied to its Balancer fork. Gnosis temporarily restricted bridge activity to prevent cross-chain propagation, while Monerium froze 1.3 million EURe in the affected vault.

Additionally, BitFinding and Base MEV bots recovered smaller sums — about $750,000 in total — and returned them to the Balancer DAO. The team added that a portion of the affected assets has been recovered or frozen and that a final verified accounting will be published once all partners complete on-chain reconciliation.

Balancer claims that any circulating loss figures are unconfirmed until independent verification is concluded.

Mitigations and next steps

As part of its response, Balancer has disabled the CSPv6 factory to prevent the creation of new vulnerable pools and halted liquidity gauges for affected pools to stop further emissions.

Furthermore, the team has enabled liquidity pool exits from paused pools to allow safe withdrawals.

The protocol’s Safe Harbor legal framework (BIP-726), adopted last year, allowed whitehat teams to intervene immediately without legal risk, a structure Balancer said “materially improved response speed and coordination.”

A final report, including confirmed loss and recovery figures, is expected “once all partner validations are complete,” according to Balancer’s latest update.

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