Drift, a Solana-based decentralized exchange recovering from a nearly $300 million April exploit, is facing pushback over a new proposal to convert remaining borrow-lend assets into stablecoins.
The Drift Foundation posted DIP-10, titled "Treatment of Remaining Asset in Borrow Lend," on its governance forum on May 12. The proposal would authorize the foundation to convert all remaining spot assets in Drift's borrow-lend pool into Tether's USDT stablecoin, creating the initial reserve for a recovery pool.
Drift says the goal is cleaner accounting, adding that converting assets into USDT would create a "predictable notional value" for future settlement instead of leaving users exposed to a basket of tokens that can keep moving in price.
The Drift Foundation
But some don't see the remaining assets as a shared recovery pot, arguing on the proposal forum page that users whose tokens weren't drained, or were less affected, shouldn't have their remaining balances liquidated to cover broader losses.
"Those Drift users that are involved in assets that were not drained should not have what is left of their money taken away from them to socialise losses," one forum user wrote, while another user said the proposal "favours simplicity over distributional fairness."
Drift hack context
The controversy follows Drift's April 1 security incident, when the protocol lost about $295.7 million in assets. Drift previously listed the stolen assets as including $159.3 million in Jupiter (JLP) tokens, $71.4 million in Circle's USDC stablecoin, $11.3 million in cbBTC, Coinbase's wrapped Bitcoin token, and $10.4 million in Solana (SOL).
Tether, the issuer of the USDT stablecoin, has been proposed as the main outside backer of Drift's broader compensation plan. Drift said Tether could contribute up to $127.5 million, while other partners could add up to $20 million, bringing possible outside support to $147.5 million.
That support doesn't appear to be a simple one-time cash payment since Drift described the structure as tied to its relaunch, USDT liquidity, and other recovery mechanisms.
Tether's involvement would also move Drift's settlement layer from USDC to USDT.