Drift Secures $148 Million in Funding from Tether and Partners, Replacing USDC with USDT After Major Exploit

Following a recent exploit, Drift Protocol has announced plans to relaunch using Tether's USDT as its settlement layer, after securing a 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. Previously, Drift used Circle's USDC as its settlement layer. The rescue package combines a revenue-linked credit facility, ecosystem grants, and loans to market makers, with a portion of trading revenue and committed capital directed towards a recovery pool to cover roughly $295 million in user losses over time. The funding comes after a North Korea-linked group infiltrated Drift, resulting in losses of over $270 million 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 transfer of funds, with some arguing that Circle could have moved faster to blacklist wallets and freeze funds. However, Circle's approach is to only freeze USDC wallets when directed by law enforcement or courts. In contrast, USDT has been more proactive in freezing assets linked to hacks or illicit activities. As the largest decentralized perpetual futures exchange on Solana, Drift has over 175,000 users and $150 billion in cumulative trading volume. The move to USDT reflects the intensifying competition in the stablecoin market, with exchanges, fintechs, and traditional institutions vying for control of on-ramps, liquidity, and settlement layers. While USDT still dominates the market, USDC has been gaining ground, with Circle's transaction volume outpacing Tether's in recent months. The new funding package will also enable Tether to fund fee reductions and user incentives tied to Drift's transition to USDT, as well as provide liquidity support to designated market makers.