Drift Secures $148 Million in Funding from Tether and Partners to Recover from Exploit

Following a significant exploit, Drift Protocol has announced plans to relaunch with Tether's USDT as its primary settlement layer, after securing a funding package of up to $147.5 million from Tether and partners. The package, which includes a $127.5 million contribution from Tether and $20 million from other partners, is designed to support user recovery and reboot the platform as a USDT-based perpetual futures exchange on Solana. Previously, the platform relied on Circle's USDC as its settlement layer. The funding package combines 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 aimed at covering approximately $295 million in user losses over time. The exploit, which occurred on April 1, resulted in losses exceeding $270 million and was attributed to a North Korea-linked group. Drift's governance token, DRIFT, has since lost around 70% of its value. The incident sparked criticism of Circle for not halting the transfer of funds following the exploit, with some arguing that the company could have acted faster to freeze assets and prevent the attacker from moving the stolen funds. In response, Circle's CEO emphasized that the company only freezes USDC wallets when directed by law enforcement or courts. In contrast, Tether has a history of freezing assets linked to hacks and illicit activities. As the largest decentralized perpetual futures exchange on Solana, Drift boasts over 175,000 users and $150 billion in cumulative trading volume. The platform's transition to USDT is seen as a strategic move, with Tether planning to fund fee reductions and user incentives tied to the transition, as well as provide liquidity support to designated market makers. The development is also viewed as a significant milestone in the intensifying competition among stablecoin issuers, with Circle's USDC gaining ground on Tether's long-standing dominance in recent months.