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

Following a devastating 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, 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 relied on Circle's 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 allocated to a recovery pool aimed at covering approximately $295 million in user losses over time. This development comes after a North Korea-linked group infiltrated Drift Protocol, posing as a quantitative trading firm for about six months before executing an exploit that exceeded $270 million on April 1. Drift's governance token, DRIFT, has lost around 70% of its value since the exploit. The incident sparked criticism of Circle for its handling of the situation, with some arguing that the company could have acted faster to freeze funds and prevent the attacker from transferring assets. However, Circle's CEO, Jeremy Allaire, explained that the company only freezes USDC wallets when directed by law enforcement or courts, 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 roughly $150 billion in cumulative trading volume, Drift's transition to USDT is expected to have significant implications for the stablecoin market. The competition between stablecoins is intensifying, with exchanges, fintechs, and traditional financial institutions vying for control of the on-ramps, liquidity, and settlement layers that underpin digital asset markets. While USDT still maintains a significant lead, Circle's USDC has been gaining ground, with its transaction volume outpacing Tether's in recent months. With the new funding package, Tether plans to support fee reductions and user incentives tied to Drift's transition to USDT, as well as provide liquidity support to designated market makers to enhance trading depth at relaunch. The move is expected to position USDT at the center of Drift's trading infrastructure, providing a pathway to restore user funds and resume operations.