In a stark reminder of persistent risks in decentralized finance (DeFi), the SwapNet protocol suffered a major smart contract exploit that drained up to $16.8 million in cryptocurrency late Sunday on the Base blockchain. The breach, which impacted liquidity flowing through the Matcha Meta decentralized exchange (DEX) aggregator, has reignited industry concerns about security models that rely on complex integrations and persistent token approvals. Blockchain security firm PeckShield estimated the total loss at roughly $16.8 million, although some analytics providers, including CertiK, suggest the figure could be closer to $13.3 million. The stolen funds were largely converted from stablecoin into ETH before being bridged away from Base, complicating rapid recovery or traceability efforts.
What Happened? Inside the SwapNet Exploit
The exploit was rooted in a vulnerability tied to SwapNet’s router smart contract, one of the core components used by Matcha Meta’s trading interface. In a post on the X (formerly Twitter) social platform, Matcha Meta warned users that those who had turned off one-time token approvals were most at risk, urging them to revoke permissions immediately to prevent further losses.
In decentralized applications, users must grant permission for smart contracts to move tokens on their behalf. Many protocols introduced “one-time approvals” as a security feature, allowing users to authorize a single transaction rather than giving indefinite access. Users who disabled this protective feature effectively gave persistent permission to third-party contracts – in this case, the SwapNet router – which attackers then exploited to drain funds.
On-chain tracking data shows the attacker swapped approximately 10.5 million USDC for roughly 3,655 ETH on Base before initiating a bridge transfer to the Ethereum mainnet. This maneuver is commonly used in hacks to obfuscate the flow of stolen assets and complicate intervention by blockchain monitors and law enforcement.
Matcha Meta’s Response and User Alerts
Matcha Meta has been quick to distance its own core infrastructure from the breach, emphasizing that the vulnerability did not originate in its primary systems but through the third-party SwapNet integration.
“We are aware of an incident with SwapNet that users may have been exposed to on Matcha Meta for those who turned off One-Time Approvals,” the platform said, reiterating its recommendation that users revoke outstanding approvals quickly to protect their assets.
The protocol has also temporarily disabled the affected contracts while investigations continue, coordinating with SwapNet developers to prevent additional vectors for similar exploits and to analyze how the flaw was introduced.
Security researchers have echoed Matcha Meta’s warnings. PeckShield, a widely followed blockchain monitoring service, flagged the drain on funds and has urged users to take immediate action to rescind permissions granted to non-one-time contract approvals.
Broader Implications for DeFi Security
This incident underscores recurring challenges in DeFi security: namely, how to balance user convenience with robust protective measures in smart contracts.
Decentralized exchanges and aggregators often streamline trading by interacting with multiple liquidity sources and external protocols on behalf of users. This complexity expands the attack surface dramatically. The more contracts a DEX interacts with, especially those with persistent token approvals, the more potential entry points exist for malicious actors.
Experts have long warned that persistent approvals – which allow contracts to spend tokens endlessly once permitted – are among the most common enablers of high-profile exploits. Best practices advise users to stick with one-time approvals and to periodically review and revoke any unnecessary permissions on wallets.
Layer-2 Networks and Emerging Risk Patterns
The exploit occurred on Base, a layer-2 blockchain built to scale Ethereum transactions. While layer-2 ecosystems offer lower fees and faster throughput, they also introduce fresh security dynamics. Smart contract bugs or permission misconfigurations on layer-2 networks can spread quickly, especially when connected to major DeFi aggregators.
There is also growing scrutiny around stablecoins like USDC, which was one of the primary assets drained in this attack. Independent analysts noted that around $3 million in USDC remains potentially freezable on the Base chain, a factor that could influence recovery strategies or market sentiment moving forward.
Some in the crypto community have criticized the issuers of centralized stablecoins and the protocols that lean heavily on them, arguing that reliance on externally controlled assets adds layers of counterparty risk to what are otherwise decentralized systems.
A Continuation of DeFi’s Security Struggles
The SwapNet breach follows a series of similar smart contract exploits that have plagued the broader blockchain ecosystem. Earlier in January, another contract exploit led to losses in excess of $26 million and caused a crash in the impacted protocol’s token price.
Industry analysts say 2025 saw a surge in losses attributed to smart contract vulnerabilities, with flawed logic, insufficient code audits, and complex integration patterns cited as persistent culprits. Smart contract issues accounted for a significant portion of crypto hack incidents in the prior year, with dozens of major breaches triggered by contract code weaknesses.
Blockchain security experts and developers continue urging early adoption of rigorous auditing standards, formal verification tools, and proactive permission management to safeguard users. However, as this latest exploit shows, even established networks and widely used protocols remain far from immune.
Final Thoughts: What Users Should Do Now
As investigations proceed, the immediate priority for affected users is to revoke any outstanding approvals tied to SwapNet or related smart contracts, especially if one-time approval safeguards were disabled. Wallet interfaces and blockchain explorers offer tools for users to review and rescind permissions.
For the broader DeFi ecosystem, the incident is yet another wake-up call on the importance of careful design, persistent security auditing, and user education – especially as decentralized finance continues to expand into new technological frontiers.
