Solana DeFi Protocol Carrot Announces Shutdown
The Solana-based leveraged DeFi protocol Carrot has announced it will cease operations due to the catastrophic impact of the Drift protocol exploit.
Users must withdraw remaining funds from Boost, Turbo, and CRT products by May 14, after which the protocol will initiate a full deleveraging, reducing all leveraged positions to zero and releasing liquidity for CRT redemptions.
Carrot stated that any recovery funds from Drift will be distributed to users as previously promised, but there is currently no specific timeline.
Source: Public Information
ABAB AI Insight
Carrot, previously a leading leveraged yield product on Solana, relied on Drift Perp's deep liquidity to provide high-yield strategies like Boost and Turbo. The announcement of its closure follows significant losses directly caused by the Drift exploit, continuing a trend of multiple Solana DeFi protocols collapsing due to reliance on a single underlying liquidity source from 2025-2026.
In terms of capital flow, Carrot concentrated user funds into leveraged positions on Drift. After the exploit, the total value locked (TVL) drastically shrank, unable to cover liabilities. The team opted for an orderly deleveraging and opened redemptions, aiming to minimize further losses and complete an exit while retaining remaining recovery rights for users to avoid legal disputes.
Similar to several Solana leveraged protocols in 2024-2025 (such as some perp vaults) that faced liquidation due to underlying protocol risks, or the gradual exit following the early Mango Markets hacking incident, Carrot is currently in a phase of contraction from high-yield expansion to risk exposure in the Solana DeFi leveraged space.
Essentially, this represents a capital concentration risk under technological substitution: the protocol concentrated user funds in leveraged strategies of a single underlying perp protocol to pursue high yields, lacking sufficient risk isolation and diversification across multiple underlying sources. The Drift exploit directly led to a chain liquidation and the protocol's unsustainability, instantly shifting liquidity pricing power from the protocol to users for self-redemption.