The Drift Protocol announced a rebranding and will now operate under the name Velocity DEX. The project is relaunching several months after the April 1 hack, in which the perpetual futures exchange on Solana lost more than $280 million. According to the investigation, the North Korean hacker group Lazarus Group was behind the attack.
The rebranding is accompanied by financial support from Tether. The company has opened a credit line for Velocity DEX in the amount of $127.5 million.
The agreement also provides for changes to the platform. In particular, the stablecoin USDT will fully replace USDC and become the main dollar asset of the Velocity DEX ecosystem.
Drift Protocol Becomes Velocity DEX
Drift Protocol announced the rebranding on X via the project’s official account, which now operates under the handle @VelocityDEX. The team stated that the new name reflects the updated platform they are now building.
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The original version of Drift has not operated since April 1. At that time, attackers gained access to the project’s multisig wallets and in about 12 minutes withdrew assets through 31 transactions.
On-chain analyst ZachXBT, as well as companies Elliptic and TRM Labs linked the attack to Lazarus Group. This is the same North Korean hacker group believed to be involved in the Bybit hack of $1.4 billion.
Due to the attack, 11 DeFi protocols that used Drift for yield strategies or vault products were affected. Among them were Pyra, which lost all deposited funds, and DeFi Carrot, which lost half its TVL.
In April, Drift reached an agreement with Tether to support the relaunch. The company will allocate about $127.5 million. As part of the deal, the exchange is also changing its main stablecoin from USDC by Circle to USDT by Tether. This will affect 128,000 users and more than 35 teams in the ecosystem.
After criticism from users, one of the Velocity DEX engineers who runs the @redacted_noah account stated that the deal with Tether is not a bailout for the project through external funding.
According to him, Tether wants a major perpetual futures exchange to operate on USDT. He did not disclose the details of the agreement, noting that he himself does not know the exact terms.
Can Users Expect Compensation?
A compensation mechanism has been set up for affected users through special recovery tokens. Each impacted wallet received tokens equivalent to confirmed losses at a rate of $1 per lost dollar.
However, these tokens can only be exchanged for real funds after the compensation fund reaches $5 million. Initially, the fund held about $3.8 million, which are the remaining assets of the protocol itself.
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The fund is expected to be replenished from the exchange’s quarterly revenue, financial support from Tether, and additional investments from strategic partners up to $20 million.
At the same time, users who decide to withdraw funds earlier will receive only a proportional share of the funds accumulated in the fund at the time of redemption. After that, they completely lose the right to further payments.
This scheme has already caused dissatisfaction among part of the community. One user even called the DAO vote on the redistribution of the insurance fund’s assets “essentially an attempt at money laundering.”
According to DefiLlama, the total amount of funds currently locked in Drift is about $217 million. Before the April hack, this figure exceeded $550 million.
The DRIFT token is trading around $0.017, which is close to its all-time low. After the platform was halted, perpetual contract trading volumes and DEX operations essentially dropped to zero. Nevertheless, based on previous activity, the exchange’s annual revenue from fees is estimated at about $35 million.
