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Carrot has announced it will shut down operations after losses linked to the Drift Protocol exploit earlier this month. The team said the incident’s impact has been “catastrophic” for its continued operations, and it has set a withdrawal deadline of 14 May for users to pull funds from products including Boost, Turbo, and CRT before the system begins a full deleveraging process.
Carrot said all leverage will be reduced to zero, with the goal of freeing liquidity for token redemptions. Users have been given until 14 May to withdraw funds from the affected products ahead of the full deleveraging process.
The shutdown follows weeks of efforts to stabilize the protocol after the initial fallout from the Drift exploit. On 2 April, Carrot said the Drift exploit caused significant losses for users. Assuming no recovery of funds, CRT holders were facing an estimated ~50% loss, prompting the protocol to adjust valuations and begin restructuring.
At the time, Carrot moved to restrict withdrawals in certain markets, reduce leverage, and consolidate assets to support redemptions.
DefiLlama data cited by Carrot shows its total value locked (TVL) fell sharply following the Drift exploit. The protocol held roughly $28 million in TVL on 1 April, the day of the incident. Since then, liquidity has steadily declined, dropping to around $2 million as users withdrew funds and positions were unwound.
The protocol said the scale of the outflow was significant, noting that more than 90% of capital exited the protocol in the weeks after the exploit.
Carrot stated it was not directly exploited. Instead, its exposure to the Drift ecosystem created a second-order impact that ultimately became unsustainable. The announcement described this as an indirect failure pattern—where losses from one protocol spread to another—an issue that has become more prominent as DeFi platforms become more interconnected.
Carrot said users are being allowed to withdraw funds, but the final outcome will depend in part on whether any assets are recovered from the Drift exploit. The protocol added that any future recovery would be distributed to users based on previously recorded balances, though it did not provide a recovery timeline.
Carrot also said it will remain active to manage the process even after winding down operations.
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