Drift Protocol Relaunches as Velocity DEX With Tether Backing After Lazarus Hack
What You Need to Know
- Drift Protocol lost $280 million in April exploit, relaunching as Velocity DEX with Tether backing.
- North Korean Lazarus Group drained Drift across 31 transactions in 12 minutes via compromised multisig wallets.
- Eleven DeFi protocols lost funds or had frozen assets due to Drift’s exploit and shutdown.
- DRIFT token trades near all-time low of $0.017 with zero trading volume since offline.
Drift Protocol, the Solana-based perpetual futures exchange that lost over $280 million in an April 1 exploit, is relaunching under the name Velocity DEX, backed by a $127.5 million credit line from Tether. The rebrand comes with a stablecoin swap: USDC out, USDT in, affecting 128,000 users and more than 35 ecosystem teams.
The Lazarus Group attribution matters more than the name change. The same North Korean unit responsible for the $1.4 billion Bybit hack in early 2025 reportedly drained Drift across 31 transactions in roughly 12 minutes by compromising its multisig wallets. Blockchain investigators ZachXBT, Elliptic, and TRM Labs all linked the attack to Lazarus, whose laundering methods have long relied on USDT as a preferred instrument, which makes Tether’s arrival as Drift’s financial backer an unusual structural footnote. Eleven DeFi protocols that used Drift for yield or vault strategies had funds stolen or frozen, including Pyra, which lost everything deposited, and DeFi Carrot, which saw half its TVL erased. One protocol engineer defended the Tether arrangement on X, calling it a strategic partnership rather than a bailout, while simultaneously admitting he did not know the actual terms of the deal.
The DRIFT token currently trades near its all-time low of $0.017, and both perp and DEX volume have been zero since the platform went offline.
User recovery runs through a token-based system where each affected wallet received tokens representing $1 of verified loss, redeemable only once the recovery pool crosses $5 million. The pool started at $3.8 million and is expected to grow through quarterly exchange revenue, the Tether commitment, and up to $20 million from strategic partners. Early redeemers receive only a pro-rata share and forfeit the rest of their claim, a structure that has already drawn accusations of financial sleight of hand from at least one DAO participant. After high-profile incidents like this, lookalike domains targeting displaced users typically appear within hours, and Velocity DEX’s rebrand creates fresh surface area for exactly that kind of secondary attack on confused depositors.
What the Relaunch Actually Signals
Drift’s annualized fee revenue sat at roughly $35 million before the exploit, and its TVL has dropped from over $550 million to approximately $217 million according to DefiLlama. Whether Velocity DEX can recapture meaningful volume on Solana’s perpetuals market depends on whether the 128,000 affected users treat the rebrand as a reset or a repackaging. The USDC-to-USDT switch is not cosmetic: it realigns the platform’s liquidity infrastructure toward Tether’s ecosystem, which carries its own counterparty assumptions. For the eleven protocols that had funds frozen or lost, a token-based recovery pool with a moving threshold and forfeiture mechanics is a slow and uncertain path, particularly when the platform generating the recovery revenue does not yet exist.
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