Following a devastating exploit that resulted in the loss of over $270 million in client assets, Drift Protocol has announced a significant funding package of up to $147.5 million from Tether and its partners. This investment will facilitate the recovery of user funds and support the relaunch of the platform as a USDT-based perpetual futures exchange on Solana, marking a shift away from Circle's USDC. The funding package, which includes a revenue-linked credit facility, ecosystem grants, and loans to market makers, aims to provide a pathway for Drift to restore user funds and resume operations.
A portion of the trading revenue will be allocated to a recovery pool to cover roughly $295 million in user losses over time. The recent hack, linked to a North Korea-based group, led to a significant decline in the value of Drift's governance token, DRIFT. The exploit also sparked controversy surrounding Circle's response, with some critics arguing that the company could have acted more swiftly to freeze funds and prevent the attacker from transferring assets.
In contrast, Tether has demonstrated its ability to freeze assets linked to illicit activities promptly. As the largest decentralized perpetual futures exchange on Solana, Drift boasts over 175,000 users and a cumulative trading volume of approximately $150 billion.
The platform's transition to USDT is expected to position Tether at the center of its trading infrastructure, while providing a means to restore user funds and resume operations. The stablecoin market is becoming increasingly competitive, with Circle's USDC gaining traction due to its regulatory alignment and growing institutional adoption.
However, Tether's USDT still maintains a significant lead in terms of market supply. With this new funding package, Tether plans to support fee reductions and user incentives tied to Drift's transition to USDT, as well as provide liquidity support to designated market makers to enhance trading depth at relaunch.