Makina Finance: 83% of Lost ETH Recovered, v1.1 Upgrade Live Monday

Makina Finance has finished distributing the funds recovered from the DUSD/USDC Curve pool exploit, bringing an initial close to an incident that unsettled the protocol earlier this month.

In an update shared on January 23, the team said it had managed to recover 1,077.8 ETH, accounting for roughly 83% of the 1,299.18 ETH lost in the January 20 exploit. Of this, 920 ETH came directly from the MEV builder, highlighting the crucial role front-running played in enabling the high recovery rate.

The recovered funds were held in the recovery wallet 0xc22F7346eaF4340f51513bF9f01e5d722E558AB9 and have now been sent out to affected users on a pro-rata basis.

Makina said users should already see the funds in their wallets. Anyone who hasn’t received their WETH within 24 hours has been asked to open a ticket on the project’s Discord. The team also confirmed that a full technical post-mortem, along with details on how the remaining unrecovered funds will be handled, will be released next week.

How the recovery played out

The recovery hinged on two key sources: an MEV builder and a Rocket Pool validator that received part of the exploited funds during the attack.

When the exploit occurred, 276 ETH was routed to a Rocket Pool validator’s distributor contract. Under Rocket Pool’s design, rewards are automatically split between the node operator and rETH holders. In this case, 157 ETH was claimable by the operator, who later returned the full amount to Makina’s recovery wallet.

The remaining 118 ETH was automatically absorbed into rETH backing and could not be retrieved. Makina said it stayed in touch with the Rocket Pool team throughout the process, but the funds were already locked in by the protocol’s immutable logic.

MEV builder returned the bulk of the funds

The larger portion of the recovered ETH came from the MEV builder that front-ran the original exploit transaction. After discussions with Makina, the builder returned the funds it had captured, allowing the protocol to recover the majority of the losses.

Together with the Rocket Pool recovery, this brought the total recovered amount to 1,077.8 ETH, or just over four-fifths of what was lost. The funds were then moved into a multi-signature wallet before being distributed to users.

Distribution now complete

Makina confirmed that distribution has now been completed. Payouts were made in ETH and calculated using a snapshot taken at block 24273361, the block immediately before the exploit occurred.

The team said distributing ETH directly was the simplest and most transparent option, as it avoided making assumptions about how users might want their funds converted. A second distribution, covering USDC fees that were unintentionally earned during the exploit, is expected to take place next week.

What actually caused the exploit

The January 20 incident was triggered by an oracle manipulation attack on the DUSD/USDC Curve pool. The attacker used a flash loan of roughly $280 million in USDC to distort the pool’s pricing mechanics.

By manipulating the relationship between assets under management and the pool’s supply, the attacker was able to drain liquidity from the pool. While the exploit itself was executed by the attacker, a large part of the transaction was front-run by an MEV builder — a factor that ultimately made the high recovery rate possible.

Curve pool to be phased out

In the aftermath of the incident, Makina has decided to move away from the DUSD/USDC Curve pool altogether.

The protocol plans to shift liquidity to a Uniswap-based pool that will allow users to exit DUSD into USDC at a fixed price. According to the team, the move is meant to reduce reliance on external pricing mechanisms and limit the risk of similar attacks going forward.

Users who are still holding DUSD/USDC Curve LP tokens have been advised to withdraw single-sided into DUSD, as remaining in the pool will not improve recovery outcomes.

What comes next

Makina is preparing to disable Recovery Mode once its v1.1 upgrade goes live, which is currently expected around January 26. The update includes fixes for the Oracle vulnerability as well as other changes that were already scheduled prior to the exploit.

Once Recovery Mode is lifted, redemptions will reopen for whitelisted users. Holders with more than $100,000 worth of DUSD will need to complete AML and KYC checks, while the team is working on liquidity options for users who are not whitelisted.

The team says a full technical breakdown of the exploit and a detailed plan for handling the remaining 221.38 ETH in losses will be shared in the coming days.

For now, the focus shifts to whether Makina can stabilise the protocol and rebuild trust after one of the more closely watched DeFi incidents of early 2026.

Also Read: Saga Forced to Halt its EVM Network After $7 Million Exploit