Gnosis Chain hard fork recovers $9.4 million, Balancer vulnerability fund disposal sparks governance controversy

Gnosis Chain recently officially launched a hard fork, successfully recovering approximately $9.4 million that was frozen during the major security breach of the Balancer protocol in early November. As a key infrastructure within the Balancer ecosystem, this move by Gnosis Chain quickly sparked widespread discussion in the crypto community, focusing on the trade-offs between fund security, on-chain governance, and the principle of blockchain “immutability.”

According to an official announcement, the hard fork was executed on December 22, and the relevant funds have been completely removed from the attacker’s control and transferred to a recovery address managed by Gnosis DAO. Gnosis also urged all node operators to upgrade their clients promptly to avoid penalties for not following the new chain.

The background of this hard fork stems from a large-scale vulnerability attack on Balancer in early November. The attacker transferred approximately $128 million worth of assets to multiple on-chain addresses. After the incident, Gnosis validators quickly implemented an emergency soft fork, blacklisting the hacker’s addresses to freeze some of the funds. However, since frozen funds could not be returned to victims, the community ultimately believed that only by rewriting the on-chain state through a hard fork could the assets be recovered.

Philippe Schommers, head of Gnosis infrastructure, previously stated on a forum that although a hard fork contradicts the long-term goal of “keeping the network neutral and non-interventionist,” in special circumstances, the community still needs to discuss how and within what boundaries to exercise collective governance power. He emphasized that this action was an emergency response in extreme situations, not a routine operation.

However, this decision has sparked clear disagreements within the community. Some users see this hard fork as a “rescue operation” for Balancer users, believing it helps maintain trust in the DeFi ecosystem; others warn that such measures could weaken Gnosis Chain’s immutability, set a precedent for more frequent future DAO interventions in on-chain states, and even bring the blockchain closer to traditional financial systems.

In the broader recovery efforts, several projects have also made progress. Previously, StakeWise recovered about $19 million worth of osETH, and Berachain also worked with white-hat hackers to recover $12.8 million in assets. Balancer itself has proposed a compensation plan to return some of the recovered funds to affected liquidity providers, pending further community approval.

Overall, the event of Gnosis Chain’s hard fork to recover funds is not only an emergency case of DeFi security but also an important example for the crypto industry to discuss how to balance “decentralized governance and user protection.”