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 with Tether's USDT as its primary settlement layer, backed by a substantial funding package of up to $147.5 million from Tether and its partners. This investment, comprising $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, replacing Circle's USDC. The package includes a revenue-linked credit facility, ecosystem grants, and loans to market makers, with a portion of trading revenue allocated to a recovery pool to cover approximately $295 million in user losses over time. The exploit, linked to a North Korea-based group, resulted in losses exceeding $270 million on April 1, causing Drift's governance token, DRIFT, to plummet by about 70% in value. Circle faced criticism for not halting the transfer of funds after the exploit, opting not to freeze USDC wallets due to legal risks. In contrast, USDT has demonstrated its ability to freeze assets linked to hacks or illicit activities promptly. 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 seen as a strategic move. The stablecoin market is becoming increasingly competitive, with Circle's USDC gaining ground against Tether's USDT. However, with this new funding package, Tether aims to support Drift's transition, fund fee reductions, and provide user incentives, solidifying USDT's position at the core of Drift's trading infrastructure.