A fresh security breach in decentralized finance has put the spotlight back on protocol risk, with the makinafi exploit shaking confidence across yield platforms.
Flash loan-driven drain of the DUSD/USDC pool
The incident hit MakinaFi, a DeFi yield and asset management platform, on January 20, when attackers targeted one of its stablecoin pools. They siphoned around 1,299 ETH, worth roughly $4.1 million at current prices, in a tightly orchestrated operation.
The core target was MakinaFi’s DUSD/USDC Curve pool, which is built on Curve Finance and links Dialectic‘s yield-bearing token DUSD with USDC. In this case, the attacker executed a classic flash loan attack, borrowing a large amount of crypto for seconds to manipulate prices before repaying the loan.
According to on-chain data, the exploiter borrowed funds from lending protocols such as Aave and Morpho, then routed a sequence of Curve and Uniswap swaps to distort pricing inside the pool. As a result, they were able to extract more value than the pool should have allowed, ultimately walking away with 1,299 ETH in a single transaction.
PeckShield traces the funds and flags the addresses
The breach was first highlighted by blockchain security firm PeckShield, which posted a detailed alert shortly after the attack. The firm stated: “#PeckShieldAlert: @makinafi has been exploited for ~1,299 $ETH (~$4.13M). The hacker was frontrun by MEV Builder (0xa6c2…). The stolen funds are currently held in 2 addresses: 0xbed2…dE25 ($3.3M) & 0x573d…910e ($880K).”
Within minutes, on-chain monitoring tools confirmed that the stolen funds had been consolidated into two primary stolen ETH wallets. However, despite the speed of the exploit, the assets have not yet been routed through mixers or privacy infrastructure, leaving a clear trail for investigators to follow.
Currently, around $3.3 million in ETH sits in wallet 0xbed2…dE25, while approximately $880,000 remains in wallet 0x573d…910e. That said, the lack of movement so far does not guarantee user safety, as attackers can still redeploy funds or launch copycat attempts against similar pools.
MEV bots front-run part of the attack
This case did not involve only a single malicious actor. An MEV builder also inserted itself into the transaction flow. MEV bots continuously scan the Ethereum blockchain for profitable opportunities and try to front run lucrative transactions by reordering them in blocks.
In the MakinaFi exploit details published on-chain, an MEV builder address starting with 0xa6c2 managed to slip a transaction into the same bundle as the attack. Moreover, the bot captured a small slice of the profit, approximately 0.13 ETH, highlighting how competitive and adversarial Ethereum’s trading environment has become.
However, the MEV bot’s gain was negligible compared with the hacker’s haul. The interaction nevertheless underscores that, during high-value exploits, even malicious arbitrage faces competition from automated searchers racing to capture any available spread.
Security warnings and user protections
Following the breach, multiple security companies moved quickly to advise the community. Firms including PeckShield, ExVul and TenArmor urged users to revoke contract permissions and avoid interacting with MakinaFi smart contracts until further notice. Moreover, analysts stressed that users should check all DeFi approvals regularly, especially after major incidents.
So far, Makina itself has not published an official statement detailing the root cause or outlining compensation plans. However, the team is expected to work with auditors and incident response groups to reconstruct the attack path and propose fixes for the affected DUSD/USDC pool.
DeFi risk lessons from the MakinaFi exploit
The makinafi exploit has reignited debate about structural risks in DeFi, particularly around stablecoin liquidity pools and complex yield strategies. MakinaFi is known for deploying advanced strategies across Curve, Aave and Uniswap, with DUSD designed to generate yield via on-chain mechanisms.
Yet the exploit shows that even sophisticated, well-engineered architectures remain exposed to design flaws, oracle issues or incentive misalignments. Flash loan-based strategies are especially dangerous, as they allow attackers to assemble huge temporary positions, execute rapid Curve Uniswap swaps and unwind them in a single block without upfront capital.
Historically, stablecoin pools have been favored targets because they aggregate deep, seemingly low-risk liquidity. In 2025 and early 2026, DeFi exploits and protocol failures have already inflicted losses measured in billions of dollars. That said, each new incident pushes developers to harden their systems and refine on-chain monitoring tools.
What it means for DeFi users going forward
For everyday DeFi participants, the key takeaway is straightforward: capital deployed on-chain is never entirely safe. Even when platforms advertise conservative strategies, they may depend on complex smart contract interactions and external protocols vulnerable to flash loan attack techniques.
Users are increasingly encouraged to spread risk, limit exposure to single pools like the DUSD/USDC Curve pool and monitor approvals to all protocols, not just those in the headlines. Moreover, staying informed through reputable security channels and promptly reacting to alerts can reduce the impact of future incidents.
In the aftermath of this breach, MakinaFi, security firms and auditors will likely dissect the exploit in detail, while regulators and institutional investors watch closely. The broader lesson for the sector is clear: DeFi innovation continues to accelerate, but attackers and MEV bots are evolving just as fast.
Source: https://en.cryptonomist.ch/2026/01/20/makinafi-exploit-front-run/
