Drift Secures $148 Million in Funding from Tether and Partners to Revamp Protocol with USDT

Following a significant exploit, 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 package, which includes $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, replacing the previously used Circle's USDC stablecoin. The funding deal 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, resulting in a loss of over $270 million on April 1, which led to a 70% decline in the value of Drift's governance token, DRIFT. The incident also sparked criticism towards Circle for not halting the money transfer promptly, with some arguing that Circle could have frozen wallets and prevented the attacker from moving the assets. However, Circle's CEO, Jeremy Allaire, clarified that the company only freezes USDC wallets when directed by law enforcement or courts. In contrast, USDT has demonstrated its ability to freeze funds 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 have significant implications for the stablecoin market. The competition between USDT and USDC is intensifying, with USDT still leading in terms of supply, but USDC gaining ground in terms of transaction volume and institutional use. With this new funding package, Tether plans to support fee reductions, user incentives, and liquidity support for Drift's transition to USDT, further solidifying USDT's position in the market.