Drift Protocol Releases Recovery Plan After $295 Million Exploit—Key Details

Drift Protocol announced on Tuesday that it has laid out a recovery plan for users affected by the April 1 exploit, an incident that resulted in a major loss of roughly $295 million in user funds on the lending decentralized exchange (DEX).

Drift Protocol’s $295M Recovery Plan

Drift Protocol’s plan centers on a recovery token system tied to verified losses. The protocol said that every wallet affected by the April 1 exploit will receive a recovery token reflecting that wallet’s verified loss and a proportional claim on the recovery pool. 

The exchange explained that each recovery token corresponds to $1 of verified loss, and that verified loss is calculated based on the treatment of protocol remaining balances and positions, following a methodology described in a section of the post. 

Drift Protocol said the recovery pool will be seeded with the protocol’s remaining assets. Those assets will be converted into stablecoin form to lock in notional value, with the current notional value of remaining assets placed at approximately $3.8 million. 

The protocol said the final converted figure in USDT will be announced once all swaps are completed. After the initial seeding, Drift described three ongoing streams that will grow the pool until it matches total exploit losses. 

The Planned Q2 Relaunch

Alongside user recovery, Drift Protocol addressed the status of the Insurance Fund, stating that it was not affected by the exploit. The company said the notional value of the assets in the Insurance Fund before the attack was approximately $20 million. 

It also explained that releasing funds from the Insurance Fund depends on a governance proposal and subsequent DAO voting, and invited participation in governance to determine whether the funds will be made available to depositors or added to the recovery pool.

Drift’s update also covered its ongoing recovery efforts across multiple fronts, stating that recovery work is supported by cybersecurity forensic and intelligence partners, ZeroShadow and Mandiant. 

In parallel, the protocol said it has launched a bounty program in collaboration with Bybit and other partners. The bounty is described as a 10% reward on any successfully recovered assets. Drift said the program is publicly listed to increase participation from whitehats, security researchers, and the broader ecosystem.

Looking ahead, Drift Protocol said the relaunch is planned for the second quarter of the year, with the aim of returning as a “leaner, perps-native exchange” and placing an emphasis on security. 

The company noted that security changes outlined in its plan are intended as direct responses to what the April 1 attack exposed. It also stressed that some key decisions will require governance approval, with those items going through a governance proposal and DAO vote before finalization.

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