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Drift Protocol has sparked intense controversy in the decentralized finance (DeFi) community after presenting proposal DIP-10, which suggests converting all residual assets linked to the April exploit into the USDT stablecoin.
The plan, designed by the Drift Foundation, aims to establish a recovery framework for lenders and borrowers affected by the cyberattack that paralyzed the platform on April 1, 2026. Under the proposal’s terms, consolidation into USDT would reduce exposure to crypto market volatility.
The proposal argues that directly returning deposited assets to lenders before loans are liquidated would create solvency issues. It says the lending system functioned as a shared liquidity pool before the incident, meaning premature withdrawals could disrupt the pool’s accounting and liquidity for other accounts.
DIP-10 states: “Returning deposits to lenders before loans are liquidated would remove the liquidity that other accounts depend on, breaking the accounting integrity of the pool.”
To execute the transition, the foundation is considering using spot markets, OTC trading desks, or on-chain aggregators. The choice of method would depend on liquidity conditions at the time of sale. The protocol also plans to stop interest accrual from the moment operations were paused.
Not all users reacted positively to the announcement. Some participants rejected the mandatory conversion of volatile assets such as SOL, ETH, or BTC into stablecoins. Complaints reported in governance forums argue that the measure removes any opportunity for victims to benefit from potential appreciation of their original holdings during the recovery process.
Criticism also focused on the discretion granted to the Drift Foundation over execution timing and pricing strategy. Some investors contend that large-scale asset sales could pressure market prices, potentially reducing the final recoverable value for users.
The crisis management framework at Drift reflects a broader shift in DeFi, where post-exploit recoveries increasingly resemble traditional financial restructuring processes rather than automatic smart contract actions. By the end of the first quarter of 2026, the incident was described as one of the largest governance failures on the Solana network.
The platform’s official relaunch is expected in the second quarter of 2026, including a redesign of the multi-signature system intended to prevent future compromises of administrative permissions.
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