Executive Summary

Since April 1 we have been actively engaged in parallel workstreams:

• Investigating alongside law enforcement and third-party forensics firms
• Designing a robust framework for full user recovery
• Structuring a more secure platform for relaunch

This Incident Recovery Update will address the security measures for relaunch as well as the framework taking shape to advance a full user recovery. We expect to share additional details on each element of the recovery and relaunch with the community as they become available. 

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User Recovery Framework

Our first and most important priority is the Drift community. We have outlined below key elements of a recovery framework, which will be designed to provide impacted users with a resolution as the protocol rebuilds.

• Recovery Pool: Drift Protocol has secured a collaboration with Tether and other partners, through which Tether is proposed to contribute up to $127.5 million and other partners are proposed to contribute $20 million to support user recovery following the April 1 exploit. The support package contemplates a $100 million revenue-linked credit facility, an ecosystem grant, and loans to market makers. During the initial phase of the collaboration, a substantial portion of exchange revenue, together with committed support capital, is intended to fund a dedicated user recovery pool. This structure is designed to address the $295 million in outstanding user losses over time as exchange revenue grows. Drift has been actively working with law enforcement and blockchain forensics partners to track and recover stolen assets. Any funds recovered would be contributed to the recovery pool.
• Recovery Token: To streamline distribution of recovery assets and provide liquidity for impacted users, Drift will issue a dedicated recovery token - separate from the DRIFT governance token - to each user impacted by the April 1 exploit. Each token is intended to represent a claim on the recovery pool and will be transferable. Additional details on token mechanics will be provided in the near term.

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Structured Security for Relaunch 

Drift is undergoing a full protocol reboot with security as the foundation. Prior to go-live, each component will pass through independent audits. The Protocol will implement hardened operational security practices across the entire stack – from key management, to infrastructure, to team access controls. 

Protocol relaunch is contingent upon completion of two independent audits from industry leaders:

• Ottersec: Working with Drift to redesign and restructure the existing codebase to follow security best practice, and conducting a full audit before the launch of the new codebase.‍
• Asymmetric: Advising Drift on operational security best practices, mitigating the vulnerability exploited on April 1 and helping with organization-wide security enhancements.

Drift will introduce a new community-governed multisig for the management of core protocol assets, with participation from established leaders across Solana core infrastructure, DeFi, security, and liquidity - alongside key Drift ecosystem contributors.

Under the new framework, all multisig signers will be required to operate on dedicated signing devices, with transaction content independently verified outside the primary signing interface before any signature is executed. Timelocks will be enforced on all critical administrative actions, paired with real-time alerts so that anomalous proposals are flagged before they can be executed. Durable nonces will be disabled for all signers. Signer identities will be maintained on a need-to-know basis.

At relaunch, Drift will migrate from USDC to USDT as its settlement layer. Tether will extend a USDT market-making support facility through designated market makers to ensure deep, liquid markets from day one.

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Asset Status

The following table provides a detailed breakdown of the assets affected by the exploit and the funds that remain secure.

‍Assets Stolen

Comprehensive breakdown of tokens withdrawn from the protocol during the incident

Note: In support of asset recovery, Drift is actively developing a Bounty program with support from Arkham and Bybit. Drift also expects to partner with a leading Web3 blockchain intelligence firms for the next phase of this program and will share updates as they become available. 

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Assets Remaining

Breakdown of tokens not withdrawn from the protocol during the incident

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Insurance Fund Status

The Insurance Fund is designed to maintain solvency in cases of trading-related bankruptcies (e.g. liquidations or borrower defaults where collateral is insufficient). It is funded by stakers who take on this specific risk in exchange for yield. The Insurance Fund is unaffected and all Insurance Fund depositors’ assets remain intact and will be available to depositors upon protocol relaunch.

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