Drift Secures $148 Million in Funding from Tether and Partners to Revamp Protocol

In the aftermath of a devastating North Korean-led exploit, Drift Protocol has announced plans to relaunch with Tether's USDT as its primary settlement layer, thanks to a substantial funding package of up to $147.5 million from Tether and its partners. The package, which includes $127.5 million from Tether and $20 million from other partners, is designed to facilitate user recovery and reboot the platform as a USDT-based perpetual futures exchange on Solana, marking a significant shift away from its previous reliance on Circle's USDC. The funding deal comprises 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 aimed at covering approximately $295 million in user losses over time. This development comes on the heels of a North Korea-linked group infiltrating Drift Protocol, resulting in a staggering loss of over $270 million on April 1, which has seen Drift's governance token, DRIFT, plummet by roughly 70% in value. The incident sparked controversy surrounding Circle's response to the exploit, with critics arguing that the company could have acted more swiftly to freeze funds and prevent the attacker from transferring assets. In contrast, Tether has demonstrated a more proactive approach to freezing funds linked to 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 poised to have significant implications for the stablecoin market. The move is seen as a strategic play by Tether to bolster its position in the market, where competition is intensifying among exchanges, fintechs, and traditional financial institutions vying for control of on-ramps, liquidity, and settlement layers. While Circle's USDC has been gaining ground, with its transaction volume surpassing Tether's in recent months, USDT still maintains a substantial lead in terms of supply. 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, ultimately strengthening USDT's position at the core of Drift's trading infrastructure.