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

In the wake of a substantial exploit linked to a North Korean group, Drift Protocol has announced plans to relaunch with Tether's USDT as its settlement layer, following the securing of a funding package worth 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 the recovery of user funds and reboot the platform as a USDT-based perpetual futures exchange on Solana. Previously, Drift utilized Circle's stablecoin, USDC, as its settlement layer. The rescue package comprises a revenue-linked credit facility, ecosystem grants, and loans to market makers, with a portion of trading revenue and committed capital being directed towards a recovery pool aimed at covering approximately $295 million in user losses over time. This development comes after Drift suffered an exploit on April 1, resulting in losses exceeding $270 million, and its governance token, DRIFT, has since lost around 70% of its value. Circle faced criticism for its handling of the exploit, with some arguing that the company could have acted more swiftly to halt the transfer of funds. In contrast, Tether has demonstrated a greater ability to freeze funds linked to illicit activities. As the largest decentralized perpetual futures exchange on Solana, with over 175,000 users and a cumulative trading volume of roughly $150 billion, Drift's transition to USDT is seen as a strategic move. The competition in the stablecoin market is intensifying, with Circle's USDC gaining ground on Tether's USDT. However, with this new funding package, Tether aims to not only support Drift's recovery but also to further solidify its position in the market by funding fee reductions, user incentives, and extending liquidity support to market makers.