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 with Tether's USDT as its primary settlement layer, thanks to a proposed funding package of up to $147.5 million from Tether and its partners. The funding deal, which includes up to $127.5 million from Tether and $20 million from other partners, aims to support user recovery and reboot the platform as a USDT-based perpetual futures exchange on Solana. Previously, the platform utilized Circle's USDC as its settlement layer. The rescue package comprises 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 to cover approximately $295 million in user losses over time. This development comes after a North Korea-linked group infiltrated Drift Protocol, posing as a quantitative trading firm for about six months before executing the exploit on April 1. Drift's governance token, DRIFT, has lost around 70% of its value since the exploit. The incident led to criticism of Circle for not halting the money transfer promptly, with the attacker moving about $232 million in USDC from Solana to Ethereum using Circle's cross-chain transfer protocol. Circle's CEO, Jeremy Allaire, later clarified that the company only freezes USDC wallets when directed by law enforcement or courts, not in real-time during hacks, due to legal risks. In contrast, USDT has demonstrated a more agile approach to freezing funds linked to hacks or illicit activities. As the largest decentralized perpetual futures exchange on Solana, with over 175,000 users and roughly $150 billion in cumulative trading volume, Drift's transition to USDT is expected to have significant implications for the stablecoin market. The competition in stablecoins is intensifying, with exchanges, fintechs, and traditional financial institutions vying to control the on-ramps, liquidity, and settlement layers that underpin digital asset markets. While USDT still maintains a significant lead, Circle's USDC has been gaining share on the back of regulatory alignment and growing institutional use. 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. This move positions USDT at the center of Drift's trading infrastructure, providing a pathway to restore user funds and resume operations.