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

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 new settlement layer, thanks to a substantial 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. This move marks a shift away from Circle's USDC, which was previously used as the platform's settlement layer. The funding 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 exploit, linked to a North Korea-based group, occurred on April 1 and has had a significant impact on Drift's governance token, DRIFT, which has lost around 70% of its value since. Circle faced criticism for not halting the transfer of exploited funds, with some arguing that the company could have moved faster to freeze assets and prevent the attacker from moving the stolen USDC. 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 has over 175,000 users and a cumulative trading volume of roughly $150 billion. The company's transition to USDT is part of a broader trend of intensifying competition in the stablecoin market, with exchanges, fintechs, and traditional financial institutions vying for control of on-ramps, liquidity, and settlement layers. With this 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 bolster trading depth at relaunch.