Cantina Royale (CRT)

A lot of projects built on top of Drift, so this exploit hit far beyond just direct Drift users

$CRT (by @DeFiCarrot) is just one example of a yield-bearing token taking losses from relying on yield generated via Drift

Others include $USDC+ (by @reflectmoney) and likely $rgUSD (by @ranger_finance)

On top of that, many projects routed lending services (at least in part) through Drift (like @xplaceapp or @fusewallet, and plenty more)

We’ll need a few more days to see the full extent of the damage

Really bummed to see this because the idea of CRT was great from a tax perspective.

When you earn lending interest, staking rewards, or LP rewards it can be considered income.

This sucks in countries where your trading losses don't offset capital gains.

Tokens like CRT just change in value based on their underlying assets.

The protocol earns the reward, your token goes up in value, but you have no immediate taxable event.

(at least, in theory)

Compare that to self-managed defi.

Ex. you earn $10k lending interest in 2025, you lost $20k trading memes.

You still owe income tax on the $10k NOW even though you lost money overall.

If you instead bought a token like CRT that went up in value by $10k, then you sold it for a $10k gain the equation changes.

$10k gain - $20k loss = $10k loss

No tax owed today.

Unfortunately, we see the tail risk of a token that deploys across vulnerable defi protocols to try to earn a slightly above-market yield.

Even though I love the idea from a tax perspective, I will not be risking 100% of my stack for a small tax saving...