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

Following a significant exploit that resulted in the loss of over $270 million in client assets, Drift Protocol has announced plans to relaunch its platform 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 a revenue-linked credit facility, ecosystem grants, and loans to market makers, aims to support user recovery and reboot the platform as a USDT-based perpetual futures exchange on Solana. This move marks a shift away from Circle's USDC, which was previously used as the platform's settlement layer. The funding comes after a North Korea-linked group infiltrated Drift Protocol, posing as a quantitative trading firm for approximately six months before executing the exploit on April 1. The incident has led to a significant decline in the value of Drift's governance token, DRIFT, which has lost around 70% of its value since the exploit. The decision to switch to USDT has been influenced by Circle's response to the exploit, which was criticized by some in the crypto community for its perceived slowness in halting the transfer of funds. In contrast, Tether has a history of quickly freezing assets linked to hacks or illicit activities. As the largest decentralized perpetual futures exchange on Solana, with over 175,000 users and approximately $150 billion in cumulative trading volume, Drift's transition to USDT is expected to have a significant impact on the stablecoin market. The competition between stablecoin issuers is intensifying, with USDT and USDC vying for dominance in the market. While USDT still maintains a significant lead in terms of market supply, USDC has been gaining ground in recent months, with its transaction volume outpacing that of USDT. The new funding package is expected to support Drift's transition to USDT, with Tether planning to fund fee reductions and user incentives, as well as provide liquidity support to designated market makers.