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 settlement layer, thanks to a proposed funding package of up to $147.5 million from Tether and its partners. The package includes 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 user losses over time. The exploit, which occurred on April 1, was carried out by a North Korea-linked group and has resulted in Drift's governance token, DRIFT, losing approximately 70% of its value. Circle, the issuer of USDC, faced criticism for not halting the transfer of funds after the exploit, citing legal risks. In contrast, Tether has a history of freezing assets linked to hacks or illicit activities. The funding package is expected to support Drift's transition to USDT, with Tether planning to fund fee reductions and user incentives, as well as providing liquidity support to designated market makers. The move is seen as a strategic play in the intensifying competition among stablecoin issuers, with USDT and USDC vying for dominance in the market.