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

In a bid to recover from a recent exploit, Drift Protocol has announced a funding package of up to $147.5 million from Tether and its partners, with the intention of relaunching as a USDT-based perpetual futures exchange on Solana. The funding deal, which includes $127.5 million from Tether and $20 million from other partners, is structured to support user recovery and reboot the platform. Previously, Drift utilized Circle's USDC as its settlement layer, but will now transition to USDT. The exploit, which occurred on April 1, resulted in losses of over $270 million and was attributed to a North Korea-linked group. The rescue package comprises a revenue-linked credit facility, ecosystem grants, and loans to market makers, with a portion of trading revenue being directed towards a recovery pool to cover user losses over time. The move 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, Drift boasts over 175,000 users and $150 billion in cumulative trading volume. The shift to USDT is seen as a strategic move, with Tether planning to fund fee reductions and user incentives tied to Drift's transition, while providing liquidity support to market makers. The development is also viewed as part of a broader 'stablecoin war', with competition intensifying among stablecoin issuers, exchanges, and financial institutions vying for control of on-ramps, liquidity, and settlement layers in digital asset markets.