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

Following a significant exploit linked to a North Korean group, Drift Protocol has announced plans to relaunch with USDT as its settlement layer, after securing a substantial funding package of up to $147.5 million from Tether and its partners. This deal comprises $127.5 million from Tether and $20 million from other partners, aiming 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 includes 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 to cover approximately $295 million in user losses over time. The exploit, which occurred on April 1, resulted in losses exceeding $270 million, and Drift's governance token, DRIFT, has since lost around 70% of its value. Circle faced criticism for not halting the money transfer after the exploit, with the attacker transferring about $232 million in USDC from Solana to Ethereum using Circle's cross-chain transfer protocol. In contrast, USDT has demonstrated its ability to freeze funds 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 have significant implications for the stablecoin market. The competition between USDT and USDC is intensifying, with USDT still leading in terms of supply, but USDC gaining ground in terms of transaction volume and market share. With this new funding package, Tether plans to support fee reductions and user incentives tied to Drift's transition to USDT, while providing liquidity support to designated market makers to enhance trading depth at relaunch.