Drift Secures $148 Million in Funding from Tether and Partners to Recover from Exploit

Following a significant exploit that resulted in the loss of over $270 million in client assets, Drift Protocol has announced plans to relaunch its platform using Tether's USDT as its settlement layer, thanks to a proposed funding package of up to $147.5 million from Tether and its partners. The deal comprises $127.5 million from Tether and $20 million from other partners, and is structured to facilitate user recovery and reboot the platform as a USDT-based perpetual futures exchange on Solana, replacing Circle's USDC as its settlement layer. The rescue package includes a revenue-linked credit facility, ecosystem grants, and loans to market makers, with a portion of trading revenue and committed capital allocated to a recovery pool aimed at covering approximately $295 million in user losses over time. This development comes after a North Korea-linked group infiltrated Drift Protocol, resulting in an exploit of over $270 million on April 1, which led to Drift's governance token, DRIFT, losing around 70% of its value. The incident also sparked criticism towards Circle for its handling of the situation, with some arguing that the company could have acted faster to freeze funds and prevent the attacker from transferring assets. In contrast, Tether has a history of freezing assets linked to hacks or illicit activities. As the largest decentralized perpetual futures exchange on Solana, with over 175,000 users and $150 billion in cumulative trading volume, Drift's transition to USDT is expected to position the stablecoin at the center of its trading infrastructure, providing a pathway to restore user funds and resume operations. The move also reflects the intensifying competition in the stablecoin market, with Tether and Circle vying for dominance. With the new funding package, Tether plans to fund fee reductions and user incentives tied to Drift's transition to USDT, while extending liquidity support to designated market makers to bolster trading depth at relaunch.