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 new settlement layer, backed by a proposed funding package of up to $147.5 million from Tether and its partners. This package, which includes $127.5 million from Tether and $20 million from other partners, is structured to support user recovery and reboot the platform as a USDT-based perpetual futures exchange on Solana, replacing Circle's USDC. The funding package comprises 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 approximately $295 million in user losses over time. The exploit, linked to a North Korean group, led to a significant loss of funds and a 70% decline in the value of Drift's governance token, DRIFT. The incident also sparked controversy surrounding Circle's response to the exploit, with critics 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 swiftly 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 seen as a strategic move to restore user funds and resume operations. This development also reflects the intensifying competition in the stablecoin market, where Circle's USDC has been gaining ground against Tether's USDT. With the 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.