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 user assets, Drift Protocol has announced plans to relaunch using Tether's USDT as its settlement layer, thanks to a proposed funding package of up to $147.5 million from Tether and its partners. The package, which includes up to $127.5 million from Tether and $20 million from other partners, is designed 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 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 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 transition to USDT 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, USDT has a history of quickly 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 significant development in the stablecoin market. The move is part of a broader trend of intensifying competition in the stablecoin space, with exchanges, fintechs, and traditional financial institutions vying for control of on-ramps, liquidity, and settlement layers. While USDT still dominates the market, Circle's USDC has been gaining ground, with its transaction volume outpacing Tether's in recent months. The new funding package will also enable Tether to fund fee reductions and user incentives tied to Drift's transition to USDT, while providing liquidity support to designated market makers to bolster trading depth at relaunch.