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 primary settlement layer. This move comes after securing a substantial funding package of up to $147.5 million from Tether and its partners. The funding package, which includes up to $127.5 million from Tether and $20 million from other partners, is structured to support user recovery and reboot the platform as a USDT-based perpetual futures exchange on Solana. Previously, Drift utilized Circle's USDC as its settlement layer. The rescue package combines 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 aimed at covering roughly $295 million in user losses over time. The exploit, linked to a North Korean group, occurred on April 1 and has had a significant impact on Drift's governance token, DRIFT, which has lost approximately 70% of its value since. The incident also sparked criticism towards Circle for its handling of the situation, with some arguing that the company could have acted faster to prevent the attacker from transferring funds. In contrast, Tether has a history of 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 seen as a strategic move in the intensifying competition among stablecoin issuers. The stablecoin market is becoming increasingly competitive, with exchanges, fintechs, and traditional financial institutions vying for control of on-ramps, liquidity, and settlement layers. While USDT still maintains a significant lead, USDC has been gaining ground, driven by regulatory alignment and growing institutional adoption. The new funding package will also enable Tether to support fee reductions and user incentives tied to Drift's transition to USDT, as well as provide liquidity support to designated market makers, bolstering trading depth at relaunch.