Drift Protocol relaunches as Velocity Dex with Tether credit line

The company’s rebranding is backed by a $127.5 million credit line from Tether. As part of the agreement, USDT will be replacing USDC on the platform.

Drift Protocol is rebranding to Velocity Dex

Drift Protocol announced a rebrand on X using the project’s official account, which now operates under the handle @VelocityDEX. “Our new name reflects the new and improved platform that we are building,” the team wrote. 

Drift’s original platform has been offline since April 1, when attackers compromised its multisig wallets and drained assets across 31 transactions in roughly 12 minutes. Blockchain investigator ZachXBT and security firms Elliptic and TRM Labs linked the attack to the Lazarus Group, the same North Korean cyber unit behind the $1.4 billion Bybit hack. 

Eleven DeFi protocols that used Drift for yield or vault strategies had funds stolen or frozen, including Pyra, which lost all its deposited funds, and DeFi Carrot, which saw half its TVL wiped out.

The company struck a deal with Tether, which was announced in April, and commits approximately $127.5 million to support the relaunch. As part of the agreement, the exchange is switching its core stablecoin from Circle’s USDC to Tether’s USDT, a move that affects its 128,000 users and more than 35 ecosystem teams, according to Cryptopolitan’s earlier coverage of the deal.

One of the first to defend the rebrand after users began criticizing it, a Velocity DEX protocol engineer, who operates the @redacted_noah handle, stated that the Tether deal is not a bailout. According to the handle, “Tether wants a top perp exchange running on USDT,” but stopped short of going into detail because, by his own admission, he didn’t “know the actual terms of the deal.“

Can users still expect to be compensated? 

Recovery for affected users runs through a token-based compensation system. Each impacted wallet received recovery tokens representing $1 of verified loss. Users can only cash in their tokens when the recovery pool reaches $5 million. The pool started with $3.8 million from what was left of the protocol’s assets. 

The pool is expected to grow through quarterly exchange revenue, the Tether commitment, and up to $20 million from strategic partners. 

Users who redeem early receive only a pro-rata share of whatever the pool holds at that point and forfeit their remaining claim. That structure has drawn sharp criticism, with one user calling a related DAO vote on reallocating Insurance Fund assets “effectively an attempt at money laundering.”

Data from DefiLlama shows Drift’s total value is locked at approximately $217 million, down from over $550 million before the exploit. The DRIFT token trades near $0.017, close to its all-time low. Perp volume and DEX volume have both been at zero since the platform went offline, but the company’s annualized fee revenue sits at roughly $35 million based on prior activity.