Drift Secures $148 Million in Funding from Tether and Partners to Recover from Recent 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 primary settlement layer, courtesy of a $147.5 million funding package from Tether and its partners. The package, which includes $127.5 million from Tether and $20 million from other partners, is designed to facilitate user recovery and reboot the platform as a USDT-based perpetual futures exchange on Solana, replacing Circle's USDC as its settlement layer. 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 allocated to a recovery pool aimed at covering approximately $295 million in user losses over time. The recent exploit, attributed to a North Korea-linked group, has had a significant impact on Drift's governance token, DRIFT, which has lost around 70% of its value since the incident. The decision to switch to USDT comes after Circle faced criticism for its handling of the exploit, with some 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 freezing assets linked to hacks and 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, which is becoming increasingly competitive as exchanges, fintechs, and traditional financial institutions vie for control of on-ramps, liquidity, and settlement layers.