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

Following a significant exploit, Drift Protocol has announced plans to relaunch using 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. This package, which includes $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, replacing Circle's USDC. The deal combines revenue-linked credit facilities, ecosystem grants, and loans to market makers, with a portion of trading revenue allocated to a recovery pool aimed at covering approximately $295 million in user losses over time. The exploit, linked to a North Korean group, resulted in losses exceeding $270 million on April 1, causing Drift's governance token, DRIFT, to lose around 70% of its value. Circle, the issuer of USDC, faced criticism for not freezing funds quickly enough after the exploit, citing legal risks. In contrast, Tether has a history of swiftly 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 expected to position USDT at the center of its trading infrastructure, providing a pathway to restore user funds and resume operations. The move also reflects the intensifying competition in the stablecoin market, where Circle's USDC has been gaining ground on Tether's USDT, with the latter still leading in terms of supply but Circle's transaction volume outpacing Tether's in recent months.