Summary of the Exploit
- •MakinAfi, a decentralized finance (DeFi) protocol, lost approximately $4 million in a sophisticated exploit involving Maximal Extractable Value (MEV) bots.
- •The attacker utilized frontrunning techniques to manipulate transaction ordering, allowing them to drain liquidity from the protocol’s core pools.
- •This incident occurred on January 20, 2026, marking another significant security breach in the DeFi sector during the first month of the year.
MakinAfi, a decentralized finance (DeFi) protocol, suffered a significant security breach on Tuesday, January 20, 2026, resulting in the loss of approximately $4 million. The exploit was executed through a highly technical manoeuvre involving Maximal Extractable Value (MEV) frontrunning, where the attacker manipulated the sequence of transactions within a block to extract value at the expense of the protocol and its users.
Gmak, early this morning we received reports regarding an incident with the $DUSD Curve pool
At this stage, the issue appears to be isolated to DUSD LP positions on Curve. There is currently no indication that other assets or deployments are affected.
Underlying assets held in…
— Makina (@makinafi) January 20, 2026
Security researchers noted that the exploiter targeted MakinAfi’s liquidity mechanisms. By identifying high-value pending transactions in the mempool, the attacker was able to place their own trades strategically using MEV bots, effectively sandwiching legitimate activity to drain assets. This method highlights a growing vulnerability in DeFi protocols where transaction ordering can be gamed by sophisticated actors.
MEV Bots and the Mechanics of the Exploit
The core of the attack relied on the inherent structure of blockchain transaction processing. MEV bots are specialized programs designed to scan the mempool for profitable opportunities before they are finalized on-chain. In the case of MakinAfi, the attacker likely used a “sandwich attack,” buying an asset just before a large user transaction and selling it immediately afterwards, profiting from the artificial price movement.
This $4 million drain is part of a broader trend of MEV-related exploits that continue to plague the Ethereum and Layer 2 ecosystems. While MEV can sometimes provide incentives for network validators, its use in predatory frontrunning remains a major point of contention and a primary source of financial loss for unsuspecting DeFi participants.
Industry Impact and Protocol Response
The market reacted swiftly to the news of the breach. While MakinAfi has yet to release a full post-mortem, initial on-chain data suggests the stolen funds were moved through various mixers to obfuscate their origin. This incident follows several other high-profile DeFi hacks in early 2026, including the $26.6 million Truebit exploit on January 8, underscoring the industry’s persistent security challenges.
The MakinAfi exploit serves as a stark reminder for DeFi developers to implement robust MEV protection measures. Protocols are increasingly turning to solutions such as private mempools and “MEV-aware” smart contract designs to mitigate the risks posed by frontrunning bots. Until these protections become standard, users remain exposed to the sophisticated tactics of MEV searchers.