Drift Foundation today published a new governance proposal that outlines how users affected by the April 1 exploit could be reimbursed, providing the clearest roadmap yet for restoring balances in the protocol’s borrow and lend markets.
The proposal, titled DIP-10, would authorize the foundation to convert all remaining assets held in the affected borrow/lend pool into USDT. The stablecoin proceeds would then be used to seed a recovery pool that will serve as the primary source of compensation for impacted users.
The discussion follows weeks of investigation and recovery planning after the incident forced Drift Protocol to pause parts of its lending infrastructure.
DIP-10 sets financial framework for recovery
DIP-10 is narrowly focused on one issue: what to do with the residual assets still held in the protocol after the exploit. Drift Foundation said converting those assets into USDT creates a fixed and transparent reserve for reimbursements. Using a stablecoin removes the risk that the value of the recovery pool could fluctuate significantly before claims are settled.
The foundation said it may use centralized exchanges, OTC desks, or on-chain aggregators to carry out the sales, selecting whichever route offers the best liquidity and operational efficiency at the time of execution. The final amount raised will determine the initial size of the recovery pool.
User balances locked to snapshot at pause time
The proposal also defines how affected user balances will be calculated. Drift will use a snapshot taken at the exact time the protocol was paused on April 1, 2026, at 18:31:47 UTC. Deposits, borrow positions, and accrued interest up to that timestamp will be included in settlement calculations.
No further interest will accrue after the pause, and users will not be charged additional borrowing costs when the platform eventually resumes operations. This approach is intended to create a definitive accounting baseline for all claims.
Why Drift won’t return tokens directly
Some users have asked whether the remaining spot assets could simply be distributed back to depositors. Drift Foundation said that it is not feasible because the borrow/lend product operates as a single shared liquidity pool. Deposited assets were used to support outstanding loans, meaning the remaining balances cannot be cleanly matched to individual users.
Returning tokens to some participants before the system is fully reconciled would undermine the accounting integrity of the pool and could leave other users undercollateralized. By converting all assets into USDT and settling claims from a common reserve, the protocol aims to ensure each user is treated under the same methodology.
Governance oversight and execution flexibility
If DIP-10 passes, the foundation and Drift Security Council will have discretion over when and how to liquidate the assets in order to minimize slippage and avoid unnecessary market impact. The proposal also commits the foundation to publishing additional transparency updates if material changes are made to the conversion or settlement process.
According to the foundation, the goal is to balance recovery speed with prudent execution while maintaining governance oversight.
Part of a broader recovery plan
DIP-10 addresses only the mechanics of converting and valuing the remaining assets. It does not cover every aspect of the reimbursement process, but it establishes the financial foundation for future distributions.
In a statement announcing the proposal, Drift Foundation said the objective is to support long-term protocol sustainability while improving transparency, reporting, and governance standards following the exploit.
April incident triggered $285 million loss
Drift Protocol was exploited on April 1, 2026, in an attack that resulted in losses estimated at roughly $285 million and forced the suspension of several services.
The incident was among the largest decentralized finance security breaches of the year and intensified calls for stronger operational controls and clearer recovery procedures across the sector. With DIP-10 now open for discussion, affected users have their most detailed view yet of how Drift intends to fund and administer reimbursements.
Also Read: Anthropic Warning Triggers 27% Crash in its PreStocks Market on Solana
