Carrot to Wind Down After Drift Exploit Fallout Triggers Over 90% TVL Slide

Carrot said it will cease operations after suffering losses connected to the Drift Protocol exploit earlier this month, calling the impact "catastrophic" for the project's ability to continue. Users have until 14 May to withdraw funds from products including Boost, Turbo and CRT. After that, the protocol will begin a full deleveraging process, reducing all leverage to zero to unlock liquidity for token redemptions. From emergency actions to closure Carrot spent the past several weeks attempting to stabilize the platform following the initial shock. On 2 April, the team disclosed that the Drift exploit had led to significant user losses. With no recovery assumed, CRT holders were facing an estimated ~50% loss, prompting valuation adjustments and a restructuring effort. Carrot also moved to restrict withdrawals in certain markets, cut leverage and consolidate assets to support redemptions. TVL data points to the scale of the damage DefiLlama data shows a sharp contraction in Carrot's total value locked (TVL) after the Drift incident. TVL stood at roughly $28 million on 1 April, the day of the exploit, then steadily fell to around $2 million as users withdrew funds and positions were unwound. The move implies more than 90% of capital exited the protocol in the weeks following the exploit. Indirect exposure, direct consequences Carrot said it was not directly hacked, but losses tied to its exposure to the Drift ecosystem created a second-order shock that it could not absorb. The episode underscores growing concerns around DeFi contagion risk, where tightly connected platforms can fail due to external protocol events. Withdrawals open, recovery timing unclear Carrot said it will distribute any future recovered assets from the Drift exploit to users based on previously recorded balances, though it did not provide a timeline. The team added the protocol will remain active to manage this process after operations wind down. Final Summary Carrot is shutting down after losses linked to the Drift exploit, with TVL dropping from about $28m to $2m and users given until 14 May to withdraw funds. The collapse highlights DeFi contagion risk, where protocols can fail due to exposure rather than a direct exploit.