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

Following a recent 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, thanks to a proposed funding package of up to $147.5 million from Tether and its partners. The deal comprises $127.5 million from Tether and $20 million from other partners, aiming to support user recovery and reboot the platform as a USDT-based perpetual futures exchange on Solana. previously, the platform utilized Circle's USDC as its settlement layer.

The rescue package 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 to cover approximately $295 million in user losses over time. The funding comes after a North Korea-linked group infiltrated Drift Protocol, resulting in a significant exploit on April 1.

Drift's governance token, DRIFT, has lost around 70% of its value since the incident. The decision to switch to USDT follows criticism of Circle's handling of the exploit, with some arguing that the company could have moved faster to freeze funds and prevent the attacker from transferring assets. In contrast, USDT has a history of swiftly freezing assets linked to hacks or 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.

The competition between USDT and USDC is intensifying, with both stablecoins vying for dominance in the digital asset market. While USDT still maintains a significant lead, USDC has been gaining ground, driven by regulatory alignment and growing institutional adoption. With the new funding package, Tether plans to support fee reductions and user incentives tied to Drift's transition to USDT, as well as provide liquidity support to designated market makers to enhance trading depth at relaunch.