Berachain Recovers $12.8M Lost in Balancer Hack, Resumes Operations

Ethereum-compatible Layer 1 blockchain Berachain has successfully recovered the approximate $12.8 million lost in the Balancer exploit, marking one of the rare full restitution cases in DeFi history. The recovery comes just days after the massive Balancer protocol hack that drained over $117 million across multiple blockchains.

Berachain Achieves Rare Full Recovery

In an update posted on X, the Berachain Foundation confirmed that all funds drained from its BEX pools had been returned to the foundation’s deployer wallet.

The recovery was achieved with the help of a white-hat hacker who cooperated following the network’s emergency restart. The foundation said it will consider issuing a bounty reward to the ethical hacker in appreciation for returning the assets.

Berachain has since unpaused core network functions, such as HONEY minting and redemption, to normal operations following a few days of intense crisis management.

Following the exploit, Berachain temporarily halted all swaps, deposits, and withdrawals to prevent further damage. This quick action helped contain the situation as developers and validators researched the vulnerability associated with the V2 protocol of Balancer.

How Berachain’s Emergency Pause Mitigated Losses

Berachain’s Chief Smokey Officer, Smokey The Bera, addressed the community on X, acknowledging the gravity of the decision to pause the blockchain.

“I’m sure that some won’t be happy about this, and we recognize that this could be seen as a contentious decision,” he said. “When approximately $12m of user funds are at risk from a malicious attacker, we attempted to coordinate the validator set to protect those users.”

The network pause allowed developers to apply a deeper technical fix, as the exploit targeted the Ethena/Honey tripool through a complex transaction involving non-native assets.

Validators later issued an emergency hard fork to freeze the attacker’s wallet, ultimately leading to the recovery of the stolen funds after negotiations with the MEV operator behind the exploit.

The Balancer Exploit and Recovery Efforts

The Balancer exploit, which occurred on November 3, targeted its V2 Composable Stable Pools and took advantage of an error in precision in the manageUserBalance function. The attacker emptied approximately $117 million in various blockchains such as Ethereum, Arbitrum, Base, Optimism, Polygon, Sonic, and Berachain.

Over 50% of stolen money was immediately exchanged to ETH, which plunged Balancer into recovery mode. The protocol provided a 20% white-hat bounty of approximately $25.6 million and requested the attacker to provide the money back within 48 hours.

The incident has reignited debate around the security limits of composable DeFi architectures. Interestingly, StakeWise, a liquid staking platform, also managed to recover nearly $20 million from the same exploit, further highlighting how coordinated responses can mitigate large-scale DeFi losses.

Community Divided Over Blockchain Halt Decision

Although the decisive move by Berachain helped to avoid larger losses, it also led to the debate of the trade-off between decentralization and security.

Some critics believe that the idea of stopping a blockchain is contrary to the very spirit of decentralization. Nevertheless, other people think that safeguarding the users is a feasible option during an emergency.

“Decentralization isn’t really hard coded in many blockchains, it’s something we just preach & it’s implemented until there’s a big hack on-chain,” one X user noted. In contrast, Uttam Singh of Alchemy defended Berachain’s move, saying, “Yes, it goes against the ethos of crypto but prioritizing users’ funds is the right call here, imo.”

The event has reignited conversations around how decentralized systems can respond to threats without compromising trust, a challenge that continues to test the boundaries of blockchain governance.

Impact on Berachain's Ecosystem and Market Performance

At the time of writing, Berachain (BERA) was trading at $1.55, down 2.84% in the past 24 hours, with a 24-hour trading volume of $53.28 million and a live market cap of $202.52 million.

The token had previously fallen more than 10% in the course of the exploit but it has since recovered after the fund recovery news, which indicated that investors have regained their confidence.

The timing of the attack was also sensitive to Berachain as it came two weeks after Greenlane Holdings Inc. (Nasdaq: GNLN) had raised funding of $110 million that was specifically aimed at the BERA ecosystem.

The round, which was managed by Polychain Capital and sponsored by Kraken, Blockchain.com, North Rock Digital, CitizenX, and dao5, had an investment of $50 million in cash and $60 million in BERA tokens.

Berachain's Recovery Sends a Strong Message

The complete recovery of Berachain is exceptional in a year of increasing DeFi adventures and partial recoveries. The openness in communication, rapid coordination, and eventual restoration of funds by the foundation has assisted in regaining confidence in the resilience of the project.

However, the event can be viewed as a wake-up call to DeFi protocols, as the developers were reminded that even a series of audits does not ensure maximum security.

With the industry expanding, the case of Berachain demonstrates the need to ensure community trust, timely response, and ethical cooperation in the protection of the decentralized ecosystems.