One cent to redeem, nearly four to sell
Drift's April hack victims can now trade their losses as a token. Burned for cash, each dollar lost returns just over a cent. In the market it fetches about 3.7 cents. Buyers are paying for money that has not arrived, most of it promised by Tether and tied to an exchange that has so far paid 38 USDT into the pool.
Barry A via UnsplashSince Thursday, the people who lost money when Drift was hacked in April have been able to claim a token for it. DFX is issued at one token for every dollar of verified loss, measured in USDT, and can be burned in exchange for a share of a recovery pool. On Sunday afternoon Drift's dashboard showed 3.11 million USDT in the pool and 298.71 million DFX outstanding. Burning one returned 0.010417 USDT, or just over a cent for each dollar lost. On the open market, DFX was trading at about 3.7 cents in its most active pool, according to DexScreener, roughly three and a half times what the pool would pay for it. Buyers are paying for money that has not yet arrived.
Drift, a perpetual-futures exchange on Solana, lost about $295.4m of its users' funds on 1 April. The Drift Foundation says Mandiant identified the attacker as UNC6862, "a North Korean threat group". Drift has since relaunched as an exchange called Velocity, and Velocity's trading is supposed to repay the loss, alongside outside money.
Drift's post of 1 October lists four sources for the pool. Every day at 00:00 UTC, Velocity pays in a share of its net protocol revenue: 60 per cent of the first 30,000 USDT of a day's revenue, 70 per cent of the next 70,000 and 90 per cent above 100,000. Tether has committed up to 127.5m USDT "to support relaunch and user recovery", and other strategic partners up to 20m. Anything recovered from the attacker goes into the pool as well. Net protocol revenue is defined as 70 per cent of Velocity's net trading fees, after 15 per cent goes to its insurance fund and 15 per cent to its vAMM capital.
The dashboard shows what has arrived. All 3.11m USDT is seed capital, a one-off deposit of what was left of Drift's assets. Exchange revenue has added 38.06 USDT in total. Tether's line reads 0.0. At the 60 per cent rate that applies to a day's first 30,000 USDT, 38.06 USDT works out at about 63 USDT of net protocol revenue. Holders have redeemed 253,600 DFX for about 2,640 USDT.
Tether's share is not a fixed sum waiting to be paid. Drift's recovery plan of 5 May said Tether's deployment "will be based on the exchange's prior-quarter revenue", and the dashboard labels the line "Matching loan from Tether". When the package was announced in April, The Block reported that it was made up of a $100m revenue-linked credit facility, an ecosystem grant and loans to market makers. So the largest promised source depends on the one that has produced 38 USDT so far. If Velocity's trading picks up, Tether's money should follow. If it does not, that money will be slow to come.
Some terms have changed since May. The May plan said redemptions would open once the pool held more than $5m; they opened at about $3.1m. It described revenue being paid in each quarter; it is now paid in daily. It put the value of Drift's remaining assets at about $3.8m, and the converted figure is 3.11m USDT. The token supply is fixed at 299,500,810.998 DFX, one per verified USDT of loss, about $4.1m more than the $295,426,725.97 loss figure in the May plan. Drift's posts do not explain the difference.
The stolen money has not disappeared. According to the Foundation's update of 30 September, the attacker bridged the funds to Ethereum as about 130,259 ETH across four wallets. Three of them have not moved and hold 107,165 ETH, worth about $290m at Sunday's price of roughly $2,703. The fourth sent about 23,094 ETH into the Tornado Cash mixer on 23 July. About $9.2m has been frozen, and the Foundation and Bybit are offering a bounty of 10 per cent of anything recovered. Recovery would mean getting those coins back from a group Mandiant ties to North Korea.
The token is designed to reward patience. Drift says the pool "only grows", the redemption amount "never falls" and supply "only shrinks". Each redemption burns DFX, and if 10 per cent of the supply is redeemed, each remaining token gets about 11 per cent more of every later deposit. Any DFX still unclaimed when the claim window closes on 1 January 2028 will be burned. A victim who redeems now gets a cent and gives up any future share. A victim who sells at 3.7 cents gets more than that, and the buyer is betting on Velocity's revenue, Tether's matching loan and 107,165 ETH sitting in three wallets. The price was down about 29 per cent over the day.