Drift Secures $148 Million in Funding to Recover from Massive Exploit and Transition to USDT

In the aftermath of a recent exploit orchestrated by a North Korean group, Drift Protocol has announced plans to relaunch with Tether's USDT as its primary settlement layer, following the securing of a substantial funding package worth up to $147.5 million from Tether and its partners. The package, comprising $127.5 million from Tether and $20 million from other partners, is structured 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 deal includes 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 roughly $295 million in user losses over time. The exploit, which occurred on April 1, resulted in losses exceeding $270 million and led to a significant decline in the value of Drift's governance token, DRIFT. The incident also sparked controversy surrounding Circle's response to the exploit, with some critics arguing that the company could have acted more swiftly to freeze funds and prevent the attacker from transferring assets. In contrast, Tether has demonstrated a more proactive approach to freezing funds linked to 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 confidence and resume operations. The development is also notable within the context of the intensifying competition in the stablecoin market, where Circle's USDC has been gaining ground on Tether's USDT. With this new funding package, Tether plans to support fee reductions and user incentives tied to Drift's transition to USDT, as well as extend liquidity support to designated market makers, thereby bolstering trading depth at relaunch.