Limited-slip differential (LSD)
A differential that biases torque toward the wheel with grip while allowing some slip. Used clutch-type units run $400-800; new ones $1,100-2,200.
A limited-slip differential does the same essential job as a welded differential - keeping both rear wheels driving - but with some compliance. Clutch-type units use clutch packs and ramp angles to decide how much torque goes where and under what conditions.
Published figures put a used clutch-type LSD at $400 to $800, which is four to eight times the cost of welding, and the community description is consistent: more durable, quieter and smoother than a welded diff.
Why pay the difference
If the car is also your transport, this is the biggest quality-of-life difference available in phase 1. No chirping at parking speeds, much better in the wet, and far less street tire wear.
If you are making real power, it is also kinder to the axles, the driveshaft and the differential mount, because some compliance means not every shock load goes straight through.
It holds value and can be rebuilt, where welding is permanent.
The catch
You are almost certainly buying used, so the condition is unknown - and a worn clutch LSD behaves disconcertingly like an open differential, which is the worst of both worlds. The clutch packs are a wear item and need rebuilding eventually.
A new two-way LSD at $1,100 to $2,200 solves the unknown-condition problem and adds adjustable preload, which is the competition answer. It is also more than most first builds' entire phase 1, and it will not make you faster while you are learning.
One-way, 1.5-way, two-way
How it behaves on and off throttle. Two-way locks under both acceleration and deceleration, which is generally what drift drivers want because the car behaves the same on and off throttle mid-corner. 1.5-way locks fully on power and partially off it - a common and perfectly usable compromise. One-way locks only on power, which makes lifting off change the car's behaviour.
Questions
How do I know if a used LSD is worn?
Drive the car slowly in a tight circle on full lock and feel for both wheels driving. A worn clutch LSD behaves close to an open differential, which is the thing you are paying to avoid - so test it rather than trusting the description.
Is an LSD better than welded for drifting?
Not for performance - both keep the wheels turning together. It is better to live with, kinder to the drivetrain, and rebuildable. Welded is cheaper and completely predictable.